Nato's Stoltenberg wins Norges bank job in contested choice

Nato Secretary-General Jens Stoltenberg will become governor before the end of this year. PHOTO: REUTERS

OSLO (BLOOMBERG) - Nato Secretary-General Jens Stoltenberg was named Norway's next central bank chief, a choice likely to prove controversial given his close ties to the ruling party and political concerns raised over monetary independence.

The former prime minister will serve out his full term at Nato, concluding on Oct 1, and will become governor before the end of this year.

The decision comes at a delicate time for the military alliance amid one of its worst standoffs with Russia since the end of the Cold War.

The Finance Ministry picked Mr Stoltenberg over Deputy Governor Ida Wolden Bache, who will lead the central bank when current chief Oystein Olsen's term ends next month.

The government's choice means it passed on the chance to appoint a female central bank chief for the first time.

"We made an overall assessment, based on his broad understanding of society both nationally and internationally, the broad background, the top management experience that Stoltenberg has and also his good economic background," Finance Minister Trygve Slagsvold Vedum told reporters in Oslo.

The selection shrugs off calls by the opposition and the ally of the minority Cabinet of Prime Minister Jonas Gahr Store to ditch the candidacy of the 62-year-old, who is a close friend and former political mentor of the millionaire Labor leader.

Speaking at the same event via a video link, Mr Stoltenberg said he will focus on his Nato job until the end of his term, and will refrain from commenting on the economy before assuming the position.

The government's choice "creates some uncertainty relative to the proven" Ms Wolden Bache as the alternative, according to Danske Bank analyst Kristoffer Kjaer Lomholt.

Still, rate setting by a five-member committee means "risk for a significant shift is limited in our view".

With the oil-rich economy weathering the fallout from the pandemic better than most, the central bank became the first among those with the world's most-traded currencies to raise interest rates last year.

At its regular policy meeting last month, the Norges Bank kept borrowing costs on hold, but indicated it was on track to raise them again in March.

Most analysts expect policymakers raise rates three more times this year to rein in surging inflation.

An economist by training, Mr Stoltenberg was prime minister twice and has also held the finance minister's portfolio.

While Mr Store distanced himself from the nomination, politicians including former premier Erna Solberg have said the move would raise concerns over the central bank's independence.

Still, Norway's Justice Ministry said last month that Mr Stoltenberg's friendship with Mr Store doesn't create a conflict of interest.

The job also entails overseeing the nation's US$1.3 trillion (S$1.75 trillion) wealth fund, the world's largest.

"It is intended that the date of accession will be around Dec 1, but this will be determined by the signing of the employment contract shortly," the Finance Ministry said.

As the top civil servant of the North Atlantic Treaty Organisation, Mr Stoltenberg directs discussions within the 30-member alliance, which is at the heart of a confrontation with Russia over Ukraine.

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