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Home / Business / Economy / Official Cash Rate

Adrian Orr heading to the banker pow-wow that can change the world

Liam Dann
By Liam Dann
Business Editor at Large·NZ Herald·
20 Aug, 2019 06:30 AM3 mins to read

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Reserve Bank Governor Adrian Orr. Photo / File

Reserve Bank Governor Adrian Orr. Photo / File

This weekend Reserve Bank Governor Adrian Orr will take a deep dive into the latest negative interest rates and other monetary policy trends when he attends the most important global gathering of central bankers at Jackson Hole Wyoming.

The Kansas City branch of the US Federal Reserve has held the annual economic policy symposium at the remote and mountain resort since 1978.

Dozens of central bankers from around the world will attend and hear from some of the world's leading economists on issues relevant to the future of monetary policy.

With talk of global recession rising, and almost all the world's central banks now cutting rates, or contemplating cutting, from a relatively low base it is certain that topics like negative interest rates will be on the agenda.

The theme of this year's symposium is: "Challenges for Monetary Policy".

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Between high-level speeches and deep discussions on the state of the global economy, central bankers also indulge in contemplative outdoor activities like hikes and fly-fishing.

Former Governor Alan Bollard famously painted a water colour of the mountainous landscape in 2009.

It's not clear if the social events will extend to the dance floor but if so the "limbo" might be the most appropriate dance as the big question facing every central banker this year is: "how low can you go?"

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Jackson Hole, Wyoming. Photo / Supplied
Jackson Hole, Wyoming. Photo / Supplied

More than a quarter of the global bond market is now into negative interest rate territory - raising fundamental questions about the power of traditional monetary policy.

One of the highlights of the weekend for market watchers will be a speech by US Federal Reserve chair Jerome Powell, which is widely expected to offer clues to when US rates will be cut again and by how much.

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More broadly, though, topics on the Jackson Hole agenda are likely to be academic and highly technical in nature.

They address the challenges that have arisen in monetary policy since the global financial crisis and the way forward from here.

Ultimately - as it did in 2008 and 2009 - the consensus that emerges over the weekend can have a huge and lasting influence on central bank policy.

In that sense, it impacts all of our lives.

Orr himself is likely to attract some attention from central bankers interested in RBNZ's latest move to a committee structure and dual mandate - targeting inflation and unemployment.

His straight talking and colourful approach to communication - including the use of Māori mythology to articulate the bank's mission - has also attracted international attention.

It's not clear whether Orr will be packing his fishing rods, hiking boots or paint and easel.

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Based on his recent passion for discussing alternative monetary policy strategies, it seems more likely he'll be packing a notebook and attending every session.

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