Graeme Wheeler has announced he will not seek a second term as governor of the Reserve Bank of New Zealand and will step down in September when his current term ends.

Grant Spencer, the central bank’s deputy governor, has been appointed as the acting governor of the RBNZ for six months following the expiry of Mr Wheeler’s term on September 26, which falls three days after a general election in the country.

The New Zealand dollar sank on the news, down 0.2 per cent at $0.7305.

Mr Wheeler said:

It has been a great privilege to serve in this role, and in the remaining eight months I will remain fully focused on the economic challenges and opportunities facing the New Zealand economy. It was my intention, when I was appointed, to serve one term, and then to take on governance roles.

Appointed governor of the RBNZ in September 2012, Mr Wheeler previously worked for the World Bank from 1997 to 2010 and had been at New Zealand’s Treasury department from 1993 to 1997.

During his term, Mr Wheeler led the central bank in raising official interest rates in 2014 to 3.5 per cent, before embarking on a series of cuts from mid-2015 onward that have taken the official cash rate to a record low 1.75 per cent.

The central bank cut interest rates to cushion the economy from a sharp drop in commodity prices, particular dairy, which is the country’s key export. However, low rates helped stoke a property price bubble that has proved contentious and prompted the introduction of macroprudential policies, including lending restrictions for borrowers.

Steven Joyce, finance minister, explained his reasoning behind Mr Spencer’s appointment thus:

Following advice from the Cabinet Office and consultation with Cabinet, I have decided that the most appropriate course of action would be to appoint an acting Governor for a six month period to cover the post-election caretaker period. This will give the next Government time to make a decision on the appointment of a permanent Governor for the next five year term.

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