New RBA deputy governor just what the doctor ordered

Jim Chalmers in Bank of England veteran Andrew Hauser has the experienced foreign central banker he wants to inject the fresh thinking the Reserve Bank needs.

Jim Chalmers has backed up rhetoric with action, after appointing former Bank of England senior official Andrew Hauser to the position of Reserve Bank governor.

In Andrew Hauser, Jim Chalmers has found the experienced foreign central banker to inject the fresh thinking the Reserve Bank needs.

The 30-year Bank of England veteran is the first foreigner to hold such high office in our central bank, which has preferred to promote from within.

Appointing RBA lifer Michele Bullock as the continuity candidate to replace the much maligned Philip Lowe made absolute sense.

But the RBA review said the central bank was too insular and in need of fresh blood and a different perspective.

Putting Ms Bullock in the top job fell short of the Treasurer’s rhetoric about “renewing and revitalising” the country’s key independent economic institution.

That makes Hauser – an experienced outsider – the perfect choice, and Chalmers will be well pleased. Importantly, Chalmers has discerned in Hauser an energetic advocate for driving change at the RBA.

Across three conversations over the past couple of months – including one in person in Sydney, where the candidate also met his future boss, Bullock – Chalmers was impressed with Hauser’s deep thinking about the role of central banks, and his deep engagement with the RBA review.

It’s a big promotion for Hauser, who wasn’t on the BoE’s monetary policy board and who will now represent one of the two RBA staff votes on interest rate decisions affecting the more than three million households with a mortgage.

Hauser will need to be an effective and compelling advocate for the RBA’s house view on interest rates at meetings of the new monetary policy board, potentially from February.

This is a board that will include policy experts who are expected to be more assertive in challenging the central bank’s views, and where external board members, including Treasury secretary Steven Kennedy, will outnumber Bullock and Hauser seven to two.

This is also a board where each of the members will cast a vote, and where those votes will be recorded and presumably disclosed to some degree.

Beyond the rate-setting committee, the wealth of experience and insights he can offer the RBA should be considerable.

Hauser has been in charge of the BoE’s markets directorate since 2018, where he led a department of 275 people.

He will be battle-hardened from his time managing the bank’s balance sheet through the Covid-19 pandemic, when the world’s money printing presses were running hot.

In late 2022, he would have overseen the BoE’s purchase of £19.3bn ($37bn) worth of bonds that stopped the market meltdown triggered by former British prime minister Liz Truss’s disastrous mini-budget on September 28.

It’s taken a long time for the Treasurer to make the decision – the central bank has been without a deputy governor and minus a voting board member since Ms Bullock became governor in mid-September.

If Hauser can jump through all the administrative hoops and move from London to Sydney by the time of the first RBA board meeting in early February, it will have been five months.

It won’t be soon enough for Bullock.