OCR decisions 'should be made by RBNZ board'
BUSINESSDESK: The Reserve Bank of New Zealand’s monetary policy decisions should be made by its board rather than the governor alone given the calibre of directors, the Manufacturers and Exporters Association says.
The central bank this week named Rod Carr, vice-chancellor of the University of Canterbury, to its board.
“The governor system means that one person is left to make a decision which impacts a diverse group of sectors," association chief executive John Walley says.
"It would make sense to have a board that could include members from a range of backgrounds, like Rod Carr, to ensure better informed decisions.
“A person that has the skills to lead an organisation to supervise financial institutions may not be as good at determining the economy wide impacts that monetary policy has," he says.
All nine members of Australia's Reserve Bank collectively review the target cash rate when it meets nine times a year and governor Glenn Stevens serves as its chair, while the RBNZ board only reviews the performance of the governor and the bank.
"There are a number changes occurring in monetary policy at the moment with many countries adopting a more export-sensitive approach," Mr Walley said. "It is important we have the right structure in place to make those decisions.”
Dr Carr's appointment comes before the RBNZ meets to review its official cash rate this month. Economists are betting that outgoing governor Alan Bollard will leave the OCR at 2.5%, according to a Reuters poll.