January 29, 2019 / 6:31 PM / 25 days ago

Austria to name Holzmann as central bank chief, succeeding Nowotny: officials

VIENNA (Reuters) - Austria’s cabinet will on Wednesday name economist Robert Holzmann as the next governor of its central bank and Vienna’s future voice at the European Central Bank (ECB), officials said, in a move widely seen as a far-right political appointment.

Holzmann, 69, a pensions specialist who has worked at the World Bank and the International Monetary Fund, has long been the favorite for the post, now occupied by Ewald Nowotny, whose term runs until the end of August.

The Austrian National Bank’s governor sits on the ECB’s rate-setting Governing Council.

Austrian officials had said Holzmann was all but certain to take the job under an institutional carve-up agreed between Austria’s two ruling parties, Chancellor Sebastian Kurz’s conservatives and the far-right Freedom Party (FPO).

As Kurz’s party got to appoint former economy minister Harald Mahrer as the central bank’s president, a largely ceremonial role detached from monetary policy, the FPO was free to choose the next governor, said the officials, who declined to be named. Mahrer took up his post last September.

LOW PROFILE

Holzmann’s positions on monetary policy remain largely unknown. He has kept a low public profile and declined interviews since his name began circulating as a likely successor to Nowotny, an ECB hawk who was appointed with the backing of the Social Democrats.

Holzmann was a member of a liberal group of economists close to the FPO and a friend of the party’s former leader Joerg Haider, who first brought the party to mainstream electoral success and died in a car crash in 2008.

He also worked alongside fellow economist Alexander Van der Bellen — now Austria’s president, elected on an anti-FPO platform — when they were both at the University of Vienna decades ago. As president, Van der Bellen will have to sign off on Holzmann’s nomination by the cabinet.

Whatever Holzmann’s views, it will be difficult for him to be more outspoken than Nowotny, who drew an extremely rare public rebuke from the ECB last April for telling Reuters what the ECB’s first rate move could be.

“Governor Nowotny’s views are his own. They do not represent the view of the Governing Council,” an ECB spokesman said then.

Newspaper Die Presse has quoted Holzmann as saying that ultra-low interest rates give governments an “illusion about the sustainability of public finances” that could be exposed if rates rise.

Whether he will express such strong views as governor remains to be seen.

Reporting by Francois Murphy and Alexandra Schwarz-Goerlich; Editing by Gareth Jones

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