Breman ‘Gifted’ Ideal Economy as She Takes Charge at the RBNZ
(Bloomberg) — Swede Anna Breman is taking over as head of New Zealand’s central bank at an ideal time, according to the man she replaces.
Christian Hawkesby said Breman, who begins his five-year term as Reserve Bank governor in Wellington on Monday, inherits an economy that has embarked on a strong recovery at a time when inflation is starting to move towards target.
“This is my gift to the next president,” he said in an interview last week after cutting the benchmark interest rate to 2.25% and signaling that the easing cycle was likely over. “I think he’ll do a great job, and the economy is in a great position for someone coming in.”
Breman, previously deputy of Sweden’s central bank, became New Zealand’s first female governor and the first foreigner to lead the RBNZ since Britain’s Leslie Lefeaux took office in 1934.
He will be tasked with restoring order and stability after a tumultuous year that included the resignations of a governor and a chief executive and questions about a pause in rate cuts in July as the economy stagnated.
Hawkesby acknowledged this when he said it was time to take the RBNZ off the front pages and “bring back the boring”.
Following an easing campaign that has seen the Official Cash Rate slashed by 325 basis points since August last year, Hawkesby offers Breman a more stable outlook. Although the unemployment rate stands at 5.3%, a nine-year high, the economy is forecast to grow at a pace of close to 3% next year and inflation is forecast to slow from 3% to the RBNZ’s 2% target by mid-2026.
Hawkesby said he had six meetings with Breman ahead of the leadership transition, including one during negotiations over last week’s interest rate decision. He said he was not involved in the decision.
Swedish economists said that in his own country, Breman is seen as a policymaker open to supporting the labor market and the economy, provided it does not create an inflation risk.
“I would describe him as a dove,” said Susanne Spector, chief economist at Danske Bank in Stockholm. “I think he tends to put more emphasis on the economy while maintaining the inflation target.”
The RBNZ believes New Zealand is now firmly in recovery mode and will not need further stimulus. At the same time, the economy has significant spare capacity to consume, meaning it can expand at a reasonable pace before creating inflationary pressures.
This suggests Breman won’t need to change rates for a while.
“The Monetary Policy Committee has done everything it can to ensure OCR is not at the top of the to-do list,” said Sharon Zollner, chief New Zealand economist at ANZ Bank in Auckland. Zollner said that unless there is a serious deterioration in the economic outlook, the next move in interest rates should be upward, but this could take more than a year.
Bank regulation is likely to be first on Breman’s agenda, with decisions to be announced by the RBNZ following its review of bank capital buffers in December. He also has to look after an institution that has suffered from a 20% reduction in staff after the government cut expected funding.
Born in 1976, Breman joined the Riksbank in 2019 and was appointed First Deputy Governor in 2022. Breman, who holds a PhD from the Stockholm School of Economics, previously served as group chief economist and head of global macro research at Swedbank. He also worked at the Swedish Ministry of Finance and the World Bank.
His appointment as RBNZ governor signals a deepening relationship between the Riksbank, the world’s oldest central bank, and New Zealand’s pioneer of inflation targeting.
The RBNZ turned to the Riksbank for advice as it flirted with the idea of negative interest rates at the height of the Covid outbreak. Breman is now expected to introduce transparency reforms at the RBNZ and potentially export Riksbank practices such as attributed votes on policy decisions.
“Many people have argued that the Riksbank is the most transparent and also the oldest central bank in the world, and I agree,” said Jens Magnusson, chief economist at the SEB in Stockholm. “Obviously it’s hard to say how much of that is thanks to Breman, but he’s certainly had a hand in it and I think he’ll definitely bring a tradition of transparency to the RBNZ.”
Christina Nyman, chief economist at Svenska Handelsbanken in Stockholm, said Breman was always well prepared and was known as a good communicator.
He said his post in New Zealand could put Breman in a good position to become a future Riksbank governor.
“This is a very, very good opportunity to be governor of New Zealand, and if he comes back he’d probably be a very good candidate to be governor of Sweden,” Nyman said. “We are proud that the Swedish central bank and our managers are highly rated. I am confident that he will be a good manager.”
–With help from Charlie Duxbury.
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