Austria Set to Pick Economy Minister Kocher to Fill Holzmann’s ECB Seat

(Bloomberg) -- Austria is set to name Economy Minister Martin Kocher as its next central bank chief in the coming weeks, according to people familiar with the matter.

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The steps to appoint him as Austrian National Bank governor are almost finished, as part of an early selection process before Sept. 29 elections, said the people, who spoke on the condition of anonymity because the plans are private. He would begin in September 2025 after Robert Holzmann’s term ends.

Interviews for his role and three other board seats concluded in recent weeks and the General Council plans to make a recommendation at a June 24 meeting on all the candidates so that the government can then take a final decision, the people said.

A university professor who has specialized in behavioral economics, the 50-year old Kocher will succeed an incumbent who has earned a reputation as one of the most hawkish members of the European Central Bank’s Governing Council.

That will add another former politician to the handful already on the policy setting panel that is led by former French finance minister Christine Lagarde.

Despite sharing that background of serving in government, Kocher’s own career has been mainly grounded in academia. He led Austria’s IHS research institute before taking office in 2021.

The economy and labor minister has rarely commented on central bank policy, apart from commending the ECB for helping temper inflation. In a January podcast, he said a well-managed mix of monetary, budget and social policy measures would likely allow the latest phase of “painful” inflation to be shorter than previous episodes of price shocks.

Political Ramifications

The three other jobs being appointed as part of a rushed revamp of the central bank’s board could provide a hint about how the country’s next government will look.

Current board member Thomas Steiner will retain his post, while the other two positions are expected to go to Josef Meichenitsch — currently a department head at the OeNB — and Edeltraud Stiftinger, the co-chief of state-owned business lender Austria Wirtschaftsservice GmbH, the people said. She has good chances to become become vice governor, though no appointments are final until confirmed by the government.

A spokeswoman for Kocher — who announced in April that he was applying for the position — said the selection process was still ongoing and referred questions to the central bank.

The central bank declined to comment, while the Austrian finance ministry said it has yet to receive any suggestions from the OeNB General Council. AWS didn’t respond to requests for comment.

Kocher and Steiner are both linked to the center-right People’s Party, while Meichenitsch has ties to the Greens. Those two parties currently form the governing coalition.

Harald Mahrer, president of the central bank’s General Council and another People’s Party appointee, is conceding the third seat that his side could claim to Stiftinger, who is linked to the Social Democrats.

That could be intended to lay the groundwork for a so-called grand coalition. Such a combination of Austria’s two main traditional parties used to be the country’s default arrangement, making up more than half of its governments since World War II. The last such alliance ended in 2017, when the Social Democrats suffered an electoral defeat that consigned them to opposition.

Holzmann’s appointment as OeNB chief was part of a coalition deal between the People’s Party and the far-right Freedom Party, who backed him in 2018. The 75-year-old said earlier this year that he wouldn’t stand for a second term.

Job Allocation

A carve-up of key jobs along party lines is typical in Austria, part of its long-running so-called social partnership system of balancing political and economic interests as a way of maintaining overall consensus.

Polls suggest that the election will probably end the current alliance of the People’s Party and Greens that has run Austria since early 2020, and speculation on the next power deal is already under way.

While a repeat of the People’s Party’s coalition with the Freedom Party is one option, Mahrer, also head of the country’s powerful chamber of commerce, is among those who might rather revive a grand coalition — though surveys suggest they’d need a third party to have a majority.

The timing of the central-bank appointments already hints at a political dimension. The first seat becomes vacant in May 2025 and the final one in September 2025, but the government’s deadline for applications already ended in April.

Its justification for doing so was that post-election coalition talks may take months and hinder the application process. It’s true that negotiations can often be protracted, but with the Freedom Party set to make gains, the move could also be interpreted as an attempt to keep its appointees away from the OeNB.

The plans for the new central bank board means that the current vice governor — Gottfried Haber — will leave the institution to go back to academia and work in the private sector. He didn’t apply for a vacant top job at the Financial Markets Authority, which now will probably go to Mariana Kuehnel, a deputy secretary general at the chamber of commerce, according to the people.

The FMA declined to comment and the chamber of commerce didn’t have an immediately response.

(Adds comment from Ministry of Labour and Economy in 10th paragraph.)

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