It's Friday morning, the day after the Reserve Bank Governor's bombshell rate cut and I've muddled my diary.

I'm late for my meeting with Graeme Wheeler and I'm running down Victoria St in my suit like some idiot in a terrible menswear ad.

I was already nervous about how he'd take our front-page caricature - the governor in Speedos leaping "bomb" style into a paddling pool.

A few minutes later, up in the Reserve Bank's modest Auckland office, it becomes clear I needn't have worried.


Wheeler is relaxed and unhurried. He hasn't seen the cartoon. And while he's gets the gag about making a big splash he professes surprise at the surprise about the cut. He can't see the "mystery" and wants to explain.

But first, by way of a timely example, he wants to show me just how easy it is for central bank communication to misfire.

We wander through through to a Bloomberg terminal where a helpful staffer pulls up a graph for the euro and the governor explains what has just unfolded in Frankfurt.

Mario Draghi, president of the European Central Bank, has unleashed a "big bazooka" of stimulatory policies. But it has all gone terribly wrong.

The ECB package boosted its money-printing programme by 20 billion ($33.038 billion) a month. Draghi also cut its main interest rate to zero and lowered the deposit rate deeper into negative territory. The ECB is now effectively charging banks more to hold deposits with it.

The move had the desired effect, the euro plunged US2c to US$1.08. But less than two hours later it had rebounded, regaining all the ground and surging to a new peak at US$1.12.

One line at the post-announcement press conference did all the damage. Asked by a journalist whether there were further rate cuts to come, Draghi answered honestly that he didn't think so.

Suddenly markets only cared about that.

All that work and preparation unwound in minutes.

Investec chief economist Philip Shaw described the ECB president as having "shot down his own bazooka".

You can see that Wheeler, who knows Draghi personally, can really feel his pain.

Certainly he's had his own New Zealand-sized slice of it to deal with recently as economists and commentators have berated him for what they perceive as a lack of focus on inflation - currently tracking well below the 2 per cent average the Reserve Bank is supposed to target.

Following Thursday's OCR cut (to 2.25 per cent) there was relief in the commentary - but also surprise, given the governor's supposed aversion to cuts.

Wheeler wants to address this idea that he and his team are unconcerned about low inflation.

Rightly or wrongly the perception was reinforced by a speech he gave in Christchurch on February 3.

"That speech was very much aimed at responding to people who say headline inflation is low, you're failing in respect of the PTA (Policy Targets Agreement) so you need to cut rates. It's all very mechanistic, it's all very simple," he says.

"I wanted to explain why headline inflation is low and what's happening to inflation pressures in the economy and also that what's happening in New Zealand is happening in much of the rest of world."

The PTA might be short but it's quite complex with very specific language, he says.

"Some of that language was put in as a result of explicit discussions between Bill English and myself just prior to my term," Wheeler says.

The PTA, he says, talks about keeping inflation in the 1 to 3 per cent band, it talks about what causes inflation to move outside the band, it talks about the timelines and the average target over time.

It also talks about the bank looking at asset markets, financial stability issues and volatility in respect of exchange rates, output and interest rates.

"In other words it is not just a simple little formula that says: headline inflation is low, cut rates."

The speech also made it clear there were some big risks, he points out.

"You've seen [since then] more market volatility, a reduction in forecasts for international growth, you've seen the OECD reduce its forecasts and I think it's likely that the IMF will reduce its forecasts in April, you've seen some dairy auctions that were weak, you've seen house prices in Auckland (albeit early days) and you've seen surveys that showed a fall in inflation expectations.

"All of this was on top of the January statement which indicated some further easing may be required.

"I don't think it's a mystery that the Reserve Bank cut interest rates. In fact, we have 13 people who give advice to the governing committee who make these decisions and the advice from the 13 was unanimous."

In other words, as rate decisions go, this wasn't even a line-ball call.

Wheeler says he enjoys much of the commentary about the Reserve Bank. He cites an article he read about his post-rate cut press conference.

"It was very witty and I enjoyed it."

But the bank also has to tailor its communication for economists and investors in the United States and Europe who have huge power to shift our currency and effect our markets, he says.

"When I answer questions I'm talking largely to them," he says.

You get a sense Wheeler enjoys lively debate and would love to engage more in the local discussion. The fact the February speech was misinterpreted clearly worries him. But he is acutely aware of the broader responsibilities of his role. Finding the perfect balance is difficult, as his European colleague would no doubt confirm.

Watch: The Economy Hub on Wheeler's OCR cut:

Milford Asset Management Executive Director Brian Gaynor, NZME Head of Business Fran O'Sullivan and Business Editor at Large Liam Dann dissect the Reserve Bank Governor's statement and look at the challenge the dairy slump has created.