English ups monitoring of central bank boss
Finance Minister Bill English appears to be seeking greater influence over the Reserve Bank governor, requesting discussions about Graeme Wheeler’s performance from ‘‘time to time’’ with the central bank’s chairman.
Documents released under the Official Information Act show English has been preparing to send the first ever letter of expectations to Reserve Bank chairman Dr Rod Carr.
As well as demanding greater clarity from the board about the way it was monitoring its performance, English said he wished to also talk about the performance of the governor.
‘‘The duties of the board include keeping under review the performance of the governor.
‘‘I would expect to discuss your assessment of the governor’s performance from time to time.’’
While the Reserve Bank Act sets out the conditions under which the board may recommend that the Reserve Bank governor should be dismissed, or at least formally advise the Finance Minister of failings at the bank, English said communications should not be limited to these, ‘‘as I hope those circumstances would apply rarely, if ever’’.
The decision-making of the Reserve Bank, which is responsible for setting interest rates, is meant to be entirely independent of the Government.
English has delivered implied criticisms of Wheeler, largely to international media, especially his decision to raise the official cash rate during 2014.
In June 2015, English told Bloomberg that Wheeler had been ‘‘out of the zone for years now’’ in reference to his requirement to target inflation at as close to 2 per cent as possible, adding that ‘‘people think he’s got plenty of room’’ to cut interest rates.
Then in December, English said New Zealand’s sluggish growth in 2015 was down to Wheeler’s interest rate hikes.
Throughout 2015 Wheeler reversed the 100 basis points of increases he imposed a year earlier, while in March he cut the OCR to 2.25 per cent, on signs that New Zealand could be headed towards deflation.
Most bank economists expect at least one more cut before the end of the year.