Reserve Bank faces ‘test of trust and confidence’, says governor Christian Hawkesby

Christian Hawkesby says trust in the RBNZ has been tested after leadership exits. Photo / Mark Mitchell

The Reserve Bank governor says the central bank faces a “test of trust and confidence” as an organisation.

It comes after two messy departures involving its former governor Adrian Orr, and later board chair Neil Quigley, amid the fallout from the Orr saga.

In a speech to the Financial Services Council conference, Christian Hawkesby said the RBNZ had attracted unwanted attention during the year.

He acknowledged it had been a “challenging period” for the central bank.

Hawkesby was initially made acting governor after the departure of Orr, but was later made governor on a six-month basis, while a search for a long-term replacement (a role Hawkesby has said he wants) is under way.

“It’s typical for the RBNZ to be ‘in the news’ for our policy decisions, publications and research,” Hawkesby said. “But for too long this year the RBNZ has been ‘the news’, following the departure of the governor in March, the loss of our board chair in August, and everything in between.”

Hawkesby said trust and confidence in economic institutions underpinned the financial system.

“That is why I want to assure you that we are resolutely focused on our mandate of delivering low and stable inflation in medium term, and a resilient and enabling financial system.”

On monetary policy, Hawkesby said the economy appeared to stall in the middle of the year, creating even more economic slack, and scope to cut the Official Cash Rate (OCR) further.

“While our central projection for the OCR is to fall to around 2.50% by the end of the year, that could occur faster or slower depending on how the economic recovery evolves,” he said.

“Further data on the speed of New Zealand’s economic recovery will be what influences the future path of the OCR.”

– RNZ