Stevens wins a new term
Reserve Bank governor Glenn Stevens' term has been extended for a further three years in a key sign the central bank is preparing an internal candidate to take charge.
The decision, announced by federal Treasurer Wayne Swan on Wednesday, ensures Mr Stevens' tenure will stretch for at least a decade, the same length of time of his predecessor Ian Macfarlane.
The early reappointment of Mr Stevens avoids a potential political issue. His current term was due to expire on September 17, three days after the federal election.
However, the appointment for a shorter term of three years bucks the trend, given previous appointments have been for seven-year terms.
Mr Stevens' reappointment was welcomed by economists, and will allow time for a successor - widely regarded to be deputy governor Philip Lowe - to be groomed for the role.
As part of a number of changes to the nation's top financial regulators, Mr Swan also named Wayne Byres as the new chairman of the Australian Prudential Regulation Authority from mid-2014. Mr Byres, who is the secretary general of the Basel Committee on Banking Supervision, will replace John Laker, who has headed the regulator for close to a decade. Dr Laker will stand down in June 2014.
Mr Swan said Mr Stevens, who had requested the three-year extension, was recognised globally as "one of the best".
"I congratulate governor Stevens on his reappointment, which acknowledges his enormous contribution to Australia's economic resilience through his conduct of monetary policy, as well as his enduring focus on financial stability working together with our other key regulators," he said.
Economists said Mr Stevens had been governor of the RBA during a uniquely difficult period, and had negotiated it well.
"It's a very good thing ... the challenges he's faced have been on a scale not seen since perhaps the 1930s," chief economist of Bank of America Merrill Lynch, Saul Eslake, said.
"Remember that he had started to cut rates before the collapse of Lehman Brothers [in 2008] ... and I give him a lot of credit for having raised rates twice in 2007, including during the federal election campaign."
Mr Stevens became head of the RBA in September 2006. When his new three-year term ends in 2016, Australia will have had only two Reserve Bank governors in two decades.
Late last year, there was speculation Mr Stevens was being considered to head up the Bank of England on the retirement of Mervyn King. However, Mr Stevens was never formally approached, and the role was given to Canadian Mark Carney, the current head of the Bank of Canada. He will start at the Bank of England on July 1.
When Mr Stevens was appointed RBA governor, John Howard was prime minister of Australia, the official cash rate was 6 per cent, and inflation was about 4 per cent.
Only weeks before the 2007 federal election, Mr Stevens raised the cash rate by 0.25 percentage points, prompting talk about the so-called "taboo" on raising rates during an election campaign.
In March 2008, Mr Stevens raised the cash rate to 7.25 per cent, where it stayed until September that year. But rates began to be dramatically cut at the September RBA board meeting - by 4 percentage points by February 2009 - after the collapse of Lehman Brothers and the start of the global financial crisis.
Since then, Mr Stevens has raised and cut the cash rate numerous times. The official rate, which currently stands at 3 per cent, is the lowest it has been since the financial crisis began.
"Given the relative resilience of the Australian economy under Mr Stevens' stewardship, his reappointment should be seen as favourable by markets," head of the ANZ's macro-economics Katie Dean said.