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Reserve Bank forward-looking and transparent

The following comment, from Reserve Bank Governor Adrian Orr, has been supplied to in response to an opinion piece from BusinessNZ chief executive Kirk Hope titled: ‘Business concerned by blurring of Government and Reserve Bank policy’

We are operationally independent, our mandate is clear, our goals are clear, and our decision making is transparent.

Given the long and variable lags between setting the Official Cash Rate and the impact on inflation and employment outcomes, our decision making is deliberately forward looking. We cannot, and do not, set the OCR based on current or historical inflation and employment outcomes. We scan the horizon and chart for the journey. We look ahead – not behind.

A read of our public Monetary Policy Statement would clarify this issue for any interested party. We are lauded internationally for our transparency in publishing a forward-looking interest rate path to ensure people can understand our actions. Global and domestic low inflation expectations sit as a key reason for lower global and domestic official interest rates.

Our proposals to increase bank capital requirements are designed to improve the resilience of our banking system to benefit all New Zealanders. Our proposals are being discussed in a very transparent and open manner, and we continue to engage with an open mind and have shared submissions on our website.