On the eve of a widely tipped interest rate rise, the Australian government yesterday said the central bank's deputy governor would take over the top job with a brief to combat rising inflation.
Treasurer Peter Costello said Glenn Stevens would take over as Reserve Bank of Australia governor, replacing Ian Macfarlane, who ends his 10-year tenure next month.
Stevens, Macfarlane's deputy for five years, was favorite to land the governor's job and his appointment was welcomed by markets as a steady hand on the tiller as the Australian economy's outlook appears increasingly choppy.
"He has a wealth of RBA and economic experience, is market savvy and possesses a good balance of skills to steer the RBA to meet its monetary policy and other objectives," said National Australia Bank senior economist David de Garis in a commentary.
The announcement came as the Reserve Bank's monetary policy committee held its monthly meeting amid overwhelming expectations it will lift interest rates by 25 basis points to 6.0 percent after inflation surged in the second quarter this year.
The results of the meeting will be made public early today and anything other than a rate hike will represent a major shock to the markets.
Costello said Stevens' brief was to keep inflation within the Reserve Bank's existing target of 2.0-3.0 percent a year. Official data last week showed it blew out to 4.0 percent due to rising fuel and fruit costs.
The Reserve Bank and its governor make monetary policy decisions independently of government but Costello said he and Stevens would thrash out an agreement on broad policy objectives before the new governor began work.
"Most importantly, it will have the same object of the current agreement [with Macfarlane] -- of keeping consumer price inflation between two and three percent, on average, through the cycle," Costello told reporters.
Stevens was born in Sydney and earned an honors degree in economics from Sydney University before going to Canada and completing a masters in the same subject at the University of Western Ontario.