A stubbornly high dollar and stimulating growth in underperforming parts of the economy are the big challenges facing Glenn Stevens in his second term as Reserve Bank governor.
Federal Treasurer Wayne Swan on Wednesday reappointed Mr Stevens as RBA governor for another three years.
His second term will begin once his current seven-year term ends on September 17.
“He is, in particular, recognised around the world as a key policy maker and one of the best,” Mr Swan said.
Economists welcomed the move, saying it would ensure stability as the central bank copes with the threat of a high Australian dollar and tries to boost growth in underperforming sectors like construction.
JP Morgan economist Ben Jarman said Mr Stevens’ reappointment removed uncertainty about the RBA’s future direction.
“I suppose it comes down to: `if it ain’t broke don’t fix it’,” he said.
“Particularly now, given the challenges for the central banking world are just getting more and more difficult, you do want (an RBA governor) with a proven pedigree who is clearly on top of the issues.”
AMP Capital chief economist Dr Shane Oliver said announcing the reappointment now had prevented the RBA governorship from becoming an election issue.
Mr Stevens’ current term was due to expire three days after the September 14 federal poll.
“There always was a risk it could have become politicised, so the fact it has been decided quickly by the treasurer and removed as a political issue is a pretty good move,” Dr Oliver said.
Dr Oliver said Mr Stevens had helped ensure the Australian economy remained on track during the global financial crisis.
The major challenges now facing the RBA would be ensuring non-mining parts of the economy were growing strong enough to offset an expected decline in resources investment, he said.
The governor would also continue to face an uncertain global environment and a persistently high Australian dollar.
Market Economics managing director Stephen Koukoulas said Mr Stevens’ reappointment made it more likely deputy governor Dr Philip Lowe, who has only been in the job a year, would ultimately take on the top job.
“That extra three years of experience will be perfect (for Dr Lowe),” he said.
“If you were a betting person you’d say that in three years time we’ll be talking about Phil Lowe being appointed governor.”
Mr Swan also announced the appointment of Wayne Byres, currently secretary general to the Basel Committee on Banking Supervision, as chairman of the Australian Prudential Regulation Authority from July 2014.
He replaces John Laker.
Melbourne-based businesswoman Kathryn Fagg was also appointed to the RBA board by Mr Swan, with current board member Jillian Broadbent retiring after 15 years.
