Historic Appointment at New Zealand's Central Bank
Sweden's Anna Breman has officially taken charge as the Governor of New Zealand's Reserve Bank, marking a significant moment in the institution's history. Beginning her five-year term on Monday in Wellington, Breman becomes the first woman and the first foreign national to lead the RBNZ since Englishman Leslie Lefeaux served as its inaugural head in 1934.
The outgoing governor, Christian Hawkesby, described the timing of Breman's appointment as ideal, stating he's handing over an economy positioned for robust recovery. "That is my gift to the incoming governor," Hawkesby remarked in a recent interview after cutting the benchmark rate to 2.25% and signaling the end of the current easing cycle.
Inheriting a Stabilizing Economy
Breman takes the helm at a pivotal moment for New Zealand's economic landscape. The economy is projected to grow at close to 3% pace over the coming year, while inflation is expected to slow from the current 3% toward the RBNZ's 2% target by mid-2026. This comes despite the unemployment rate sitting at a nine-year high of 5.3%.
Hawkesby's tenure saw an aggressive easing campaign that slashed 325 basis points off the Official Cash Rate since August last year. The outgoing governor acknowledged the need for stability after a tumultuous year that witnessed the resignations of both a governor and a board chair, along with questions about the July pause in rate cuts when the economy showed signs of stuttering.
"It was time to get the RBNZ off the front pages and 'bring back boring,'" Hawkesby stated, emphasizing his goal of restoring order and stability to the institution.
Breman's Policy Approach and Background
In her native Sweden, Breman is recognized as a policymaker with dovish tendencies—someone open to supporting the labor market and economic growth provided it doesn't create inflation risks. Susanne Spector, chief economist at Danske Bank in Stockholm, characterized Breman as "a dove" with "a leaning towards caring more about the economy while of course safeguarding the inflation target."
Born in 1976, Breman brings substantial experience to her new role. She joined the Riksbank in 2019 and was appointed First Deputy Governor in 2022. Her academic credentials include a PhD from the Stockholm School of Economics, and her professional background features roles as group chief economist and global head of macro research at Swedbank, along with positions at the Swedish Ministry of Finance and the World Bank.
The RBNZ is convinced that New Zealand has firmly entered recovery mode and won't require additional stimulus. The economy currently has substantial spare capacity, meaning it can expand at a decent pace before generating significant inflation pressures.
According to Sharon Zollner, chief New Zealand economist at ANZ Bank in Auckland, "The Monetary Policy Committee has done its best to set things up so that the OCR is not top of her to-do list." Barring significant economic deterioration, the next rate move is expected to be upward, though likely not for at least a year.
Immediate Challenges and Future Prospects
Bank regulation emerges as the most pressing item in Breman's initial agenda, with the RBNZ scheduled to release decisions from its review of bank capital buffers in December. She also faces the challenge of nurturing an institution that has undergone a 20% reduction in staffing following government funding cuts.
Breman's appointment strengthens the relationship between the Riksbank, recognized as the world's oldest central bank, and New Zealand's pioneering inflation-targeting institution. This connection previously saw the RBNZ consulting the Riksbank about negative interest rates during the COVID-19 pandemic's peak.
Jens Magnusson, chief economist at SEB in Stockholm, noted that "Many have argued that the Riksbank is the most transparent central bank in the world, as well as the oldest, and I tend to agree." While difficult to attribute specifically to Breman, he believes she will "definitely bring a tradition of transparency with her to the RBNZ," potentially implementing reforms such as attributed votes in policy decisions.
Colleagues describe Breman as always well-prepared and an effective communicator. Christina Nyman, chief economist at Svenska Handelsbanken in Stockholm, suggested that Breman's New Zealand experience could position her well for future leadership roles, including potentially becoming Riksbank governor. "It's a very, very good opportunity to be the governor for New Zealand, and then if she comes back she would probably be a very good candidate for being the governor in Sweden," Nyman observed.
