RBNZ's Wheeler Complains to Bank CEO About Economic Commentary

  • BNZ appeared to bring RBNZ’s integrity into question: Wheeler
  • ‘I would like you to be aware of our serious concerns’

Graeme Wheeler.

Photographer: Mark Coote/Bloomberg

New Zealand central bank chief Graeme Wheeler complained to the head of one of the nation’s largest banks about an economic commentary written by its research department.

In a letter to Bank of New Zealand Chief Executive Officer Anthony Healy dated May 11, Wheeler said the BNZ’s Markets Outlook note of May 8 “appeared to bring into question the integrity of the Reserve Bank.” 

“I would like you to be aware of our serious concerns about the inappropriateness of the language used in the document and would ask that you bring it to the attention of those responsible for the editorial quality and legal sign off,” Wheeler wrote.

The letter, published on the Reserve Bank of New Zealand’s website, was in response to an Official Information Act request by the BusinessDesk news service. BNZ head of research Stephen Toplis, who is currently abroad, declined to comment when contacted by email Tuesday. In New Zealand, the central bank sets monetary policy and also regulates banks.

In the May 8 preview of the Reserve Bank’s last interest-rate decision, the BNZ said it would be “negligent” of the central bank not to admit to a tightening bias through an explicit expression of rate increases in its forecasts. In the event, Wheeler surprised the market by maintaining a neutral stance on rates and projecting the benchmark would not start rising from a record-low 1.75 percent until late 2019.

‘Serious Accusation’

In his letter to Healy, Wheeler, whose term ends on Sept. 26, said: “Negligence is a serious accusation and implies that the Reserve Bank would not exercise reasonable care in the discharge of its responsibilities.” He took issue with other parts of the commentary, and noted he had raised concerns with Healy about BNZ publications in the past.

“I met with you and passed on examples of the material,” he wrote. “I mentioned that the BNZ approach was damaging to the Reserve Bank and the New Zealand financial market, and the personal nature of its tone was contrary to that of other banks.”

In a May 16 response to the letter, also published on the Reserve Bank website, Healy said the BNZ was treating the matter “with the utmost seriousness.”

“We will be reviewing the contents of the BNZ Markets Outlook and the concerns expressed in your letter in detail,” Healy said. “Once that process is complete, I would appreciate the opportunity to have a call with you to discuss the outcomes of that review.”

In a separate emailed statement, Healy said “economists have an important role to play in providing opinions, and it’s important that they are independent and have a view which isn’t influenced by the wider organization.”

“However, we have acknowledged that from time to time, we may not get the right tone and will always take on board any feedback where our intent or message is not reflected in the language used,” he said.

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