Some local names mentioned as contenders include former RBNZ chief economist Dr John McDermott (now heading up think-tank Motu), Treasury chief economist Dominick Stephens, current assistant RBNZ Governor and former Westpac executive Karen Silk.
Monetary Policy Committee member Professor Prasanna Gai has also worked at the Bank of England and as a special adviser to the Governor of the Bank of Canada.
However, history suggests there will be a global recruitment process that could take several months.
“Christian will be the acting Governor until the end of this month and after that, they will determine an interim Governor,” said Westpac chief economist Kelly Eckhold.
Neither of those temporary roles would have a mandate to shape RBNZ policy the way Orr had, he said.
“I don’t think there are immediate implications here [for interest rates]. The Reserve Bank has been very explicit about what they are likely to do in the next couple of meetings.
“I would have thought they wouldn’t make much change unless something major happened to the economic outlook.”
Eckhold said it was very hard to know who would be lined up as a replacement.
“I don’t know, we haven’t really heard from the Minister about what the criteria are,” he said.
“The only real comments we’ve heard were about her desire to have a cheaper, better-focused central bank.”
Plans to cut RBNZ funding – reported in the Herald last week – could have been a flashpoint, Eckhold said.
“[Nicola Willis] could be looking for someone who can satisfy those attributes,” he said.
“It is a long time since the Reserve Bank has appointed anyone internally. So that might be a bit of a hurdle for one of the incumbents.”
The Reserve Bank could go for someone with banking sector experience but could also consider someone with financial stability and monetary policy expertise, he said.
Prior to joining Westpac, Eckhold spent 12 years at the International Monetary Fund, working on monetary policy, foreign exchange, and financial stability issues. Would he be interested in the job?
“I think it sounds like a great job,” he said.
Matt Goodson, managing director of Salt Funds, said the news came as a shock to the market.
“It was unexpected, with him being two years into a second five-year term.
“Clearly the legacy will be a somewhat mixed one given the great difficulties of monetary policy from the Covid era and thereafter.”
Goodson said the market would be deeply interested in who the replacement might be.
“It will be interesting to see if they go with a really heavy-duty economist with some practical experience, or someone who is across the wider roles of the bank, with all its regulatory functions.”
Professor Robert MacCulloch, Matthew S. Abel chair of Macroeconomics at Auckland University, has been an outspoken critic of Orr in the past few years.
“The country’s not doing well,” he said.
“You can always say it’s a clash of personalities and other factors. But my view is that at a very deep level, Orr bore a lot of responsibility for the stagnation of the country and he knows it. I think [the central bank] has failed Kiwis.”
MacCulloch said it was very hard to predict who would be chosen as Orr’s replacement.
“They can get anyone in the world, it doesn’t have to be a Kiwi,” he said.
“You want to try to avoid someone who has been partisan but you want someone with a ton of experience and expert knowledge. It’s a very technical job. The profile is not a manager.”
Kiwibank chief economist Jarrod Kerr said the resignation gave the Reserve Bank and the new Governor “a fresh start and a chance to improve its communications with New Zealanders and particularly the financial market”.
“I think all organisations should use opportunities like this to improve and I think there is a great opportunity for the central bank to regain a bit of transparency,” he said.
Kerr said the RBNZ had “a very steady safe pair of hands in Christian Hawkesby” should they look internally.
“He’s someone who I think would do a very good job ... but they do historically look externally.
“If they do that again it will be someone with international experience and of a very high calibre.”
“It’s such an important role in our world, it does deserve time to get the right person.”
ASB chief economist Nick Tuffley said the resignation did come as a surprise but the implications for monetary policy were limited with the big decisions having been made.
Tuffley backed Hawkesby to do a good job but noted the tendency to look externally.
“One of the considerations for the Government would be, do they want a fresh external perspective or not.”
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003. To sign up for his weekly newsletter, click on your user profile at nzherald.co.nz and select “My newsletters”. For a step-by-step guide, click here.
-additional reporting Jamie Gray
