Interest rate cut leaked by MediaWorks

The Reserve Bank will no longer hold lock-ups for media and analysts ahead of announcements of interest rate decisions, Monetary Policy Statements and Financial Stability Reports.Photo / Mark Mitchell

The blogger who exposed the leak of Reserve Bank rate cut says he is pleased the source has been identified and the decision to stop allowing journalists into a pre-announcement lock-up is appropriate.

A probe by Deloitte's forensic unit found that a MediaWorks reporter was responsible for the leak before the rate cut on March 10.

Economics blogger Michael Reddell sparked the inquiry after he revealed that he had been passed information on the rate decision prior to the official announcement at 9am.
Reddell said he was shocked at the ethics of the person who leaked the information.

The name of the leaker has not been released and a MediaWorks spokesperson said no further comment would be made on the matter.

In a statement MediaWorks boss Mark Weldon said: "MediaWorks unreservedly apologises to the Reserve Bank for this incident. Once MediaWorks was aware a leak had taken place, it conducted its own investigation to determine whether the leak had come from within MediaWorks and self-reported that to the Reserve Bank."

Even Finance Minister Bill English was questioned, as he is the only person outside of the Reserve Bank and the lock-up to get an advance briefing on the decision.

Rate decisions are tightly held secrets because they have the potential to move currency markets, although the inquiry found no evidence has emerged that the leak gave rise to any financial market impact.

Deloitte found "contrary to the rules of the lock-up" information on the bank's decision to cut the OCR was transmitted by a MediaWorks' reporter to several people in the news organisation's office on the morning of last month's monetary policy statement.

This information was then passed on by another person to Reddell.

He then alerted the Reserve Bank but only after the decision to cut the OCR was announced.

The Reserve Bank is now tightening its procedures for the release of information and will discontinue its embargoed lock-up for the news media.

"The leak is a serious and disappointing breach of many years of trust," said Reserve Bank Governor Graeme Wheeler.

"It created the opportunity for improper gain on financial markets and damage to the integrity of the Bank's communications. I am extremely disappointed that the information was leaked initially and then communicated more widely."

"The fact that several people outside the Bank, who had access to the information improperly, failed to alert the bank immediately, was irresponsible and left open a significant risk that the bank could have closed down quickly with an immediate official release."

Reddell said the steps taken by the Bank to resolve the issue were appropriate.

Lock-up's weren't commonly used by central banks around the world anymore so this just brought the Reserve Bank into line, he said.

But Reddell was disappointed by the tone of the Governor's statement which seemed to criticize him as part of the problem rather than part of solution.

"This major flaw in their systems would never have come to light if it hadn't been for me approaching them."