The deputy governor expects similarly frank discussions in his new job. He wants to hear from everyone – including the “crazy guy in the room”.
Already a subscriber?New Reserve Bank of Australia deputy governor Andrew Hauser can still hear the panicked voices of British financial market participants on the telephone in October 2022, hours after Britain’s then-prime minister Liz Truss released her fateful mini-budget.
“There were some very lively conversations on the phone as the market started going into freefall,” he said. “What happened is you got into a negative price spiral, which undermines financial stability.” “Ultimately, the intervention was extremely successful. It brought yields down very quickly,” he said. “And although the LDI funds struggled in the three-week period to get their act together, they did so.”has known Hauser for about 15 years and worked with him on international financial market reforms following scandals in the LIBOR and foreign exchange markets.
Hauser, who started at the RBA in February, says his natural inclination is to engage strongly with the world outside the proverbial ivory tower of central banks. Carney’s tutorage on broader engagement was very different from that of another former governor, Mervyn King, who joined the Bank of England in the same week as Hauser in 1992 and set it on a path to formal independence from the government.Hauser became King’s chief of staff, helping professionalise the bank’s bureaucracy to convince the government to hand over interest rate decision-making powers in 1998.
The first approach to Hauser came via Bullock in a phone call last year. Treasury secretary Steven Kennedy spoke to both Hauser and Breeden separately. Hauser was in Norway for one of their chats. Hauser impressed Chalmers with his detailed understanding of the 51 recommendations in the RBA review and his interest in imparting change at the institution. He was eventually chosen from four candidates shortlisted for the deputy role. He beat assistant governor Chris Kent and two other external candidates.
“For better or worse, that experience has been heavily shaped by a whole sequence of crises and shocks,” Hauser says. “It’s not just long experience with central banking, but it’s the experience of being tested as a central banker.”Hauser, 54, is no stranger to Australia. His sister has lived in Sydney for about 20 years. On a trip to this country in 1995, the first AFL game he went to in Melbourne was Carlton’s premiership in the grand final in front of more than 93,000 fans at the MCG.
“I’ve just been to Perth – you can see it,” he says. “The list of things that Australia does better than the UK is long.” During his three decades at the BoE, Hauser has been executive director for markets, executive director for banking, payments and financial resilience, chair of the audit and risk committee and head of the fair and effective markets review.In the mid-2000s, he was the head of the bank’s inflation report, which is responsible for inflation forecasting.
He enjoys getting into the weeds of financial markets and had already made well-considered contributions with an outside lens at RBA meetings, sources say. “I was frustrated at the apparent inability of the Treasury and Bank of England to provide reassurance to the markets. They had not forecast the scale of the reaction, not had they taken sufficient action to avert it,” Truss wrote.
Hauser says Truss had identified the right problem – the UK’s lack of economic growth. “The question is, where’s the next round of growth coming from? That’s what Truss was trying to do, actually – go for growth.“It wasn’t the right plan, but the underlying analysis was that without growth economies are in trouble. She asked the right question.”
“It is important for central banks, like all public authorities to understand that we are accountable to the public,” he says. “We act only under the delegated authority through the political process. “The comparative advantage that Australia potentially has, in that space, properly developed and properly harnessed – to me, and I’m an outsider – looks like the source of a real sense of optimism over the next five, 10 or 15 years,” Hauser says.
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