Straight talk, jokes and cartoons: New Zealand’s new take on monetary policy
Wellington — New Zealand’s new central bank governor has pledged to modernise the bank’s communication strategy, saying it needs to rebuild trust with its audience and make itself more accessible to the wider population.
"We’ve recently completed a survey around what people think of us," Adrian Orr said at his first media conference Thursday in Wellington. "The vast majority of the public had no idea who we are."
Orr’s debut marked a change of direction for the Reserve Bank and left little doubt he’s embarking on a new era of openness and transparency.
After opening with greetings in both Maori and sign language, Orr mixed humour with straight talking and confronted the RBNZ’s communication problems head-on.
"I think our challenge is to speak in plain English, as opposed to a high-tech scientific language that only half a dozen people actually understand and even less are interested in," he said. "We do need to have a richer dialog."
Orr was brought in to oversee the biggest shakeup at the central bank in 30 years with the adoption of a dual mandate targeting both full employment and inflation and changes to its governance structure.
His communication skills may have helped him secure the job after the bank drew criticism for its messaging under former governor Graeme Wheeler.
On Thursday, Orr left the official cash rate at a record-low 1.75%, as expected, but remodelled the policy statement. He took a more direct approach to explaining the bank’s stance and even used cartoons to make it more easily understood.
‘Really big shift’
In his first six weeks in the role, Orr has given numerous media interviews and indicated a desire for a much higher level of engagement with banks, investors and the public.
"It’s a really big shift in how the Reserve Bank is communicating with people," said Nick Tuffley, chief economist at ASB Bank in Auckland. While more speaking could raise the risk of misinterpretation, "a higher degree of transparency and clarity means everyone’s got a clearer sense of what the Reserve Bank’s doing", he said.
Wheeler once steered markets in the wrong direction on interest rates in a speech that later drew criticism from economists. In 2017, he complained to the CEO of a retail bank about an analyst’s commentary he didn’t like.
Wheeler also reduced the number of on-the-record speeches he and other RBNZ officials gave and shunned media engagement. By contrast, Orr has stressed the importance of communication since taking the helm of the RBNZ in March.
In an interview Thursday, Orr said the RBNZ needed to rebuild trust with key groups such as banks and the media, and that he "will work towards restoring that mutual respect".
That should include giving media better access to policy makers, he said.
An unusual feature of the RBNZ’s on-the-record speaking is that, while reporters are provided with a text of a speech, they are not permitted to attend. That sets it apart from central banks in Australia, Europe, the UK, the US, Japan and SA, which invite media to public speeches.
Orr said that would change.
"I want to be as useful and available as possible," he said. "And the dialogue has to be further than the official cash rate, and it has to reach households, not just the financial markets."
Illustrating his commitment to transparency, and a penchant for wit, Orr happily answered a question on whether he’s open to serving two five-year terms.
"I am young enough to do two terms," he said. "Am I wise enough? I don’t know."