RBNZ: New year, new Governor – Westpac

One of the lingering uncertainties about the NZ’s economic outlook has been the potential impact of looming changes at the RBNZ and the most important question on this front is how policy will respond to the planned expansion of the RBNZ objectives to include a focus on employment, according to analysts at Westpac.

Key Quotes

“We’ve been wary of the dual mandate as it might make it harder for the Reserve Bank of raise rates when inflation is too high, since that could conflict with a directive to maximise employment.”

“However, some of that uncertainty around the outlook for monetary policy has dissipated following the announcement that Adrian Orr will take over as RBNZ Governor in March. Mr Orr is currently the head of the NZ Super Fund. He has previously held senior roles at the RBNZ and was Chief Economist at Westpac. With his extensive experience in economic policy, we would expect that the RBNZ will remain realistic about what impact monetary policy can have on the economy in the long run, while still focusing on employment over the economic cycle.”