Statement from RBNZ chair Neil Quigley about OIAs on Adrian Orr's resignation
'The circumstances and the volume of information associated with the OIAs on Adrian Orr's resignation were complex, and we needed to be sure that our consideration of relevant information was comprehensive.
"As well as our obligations under the Official Information Act, we needed to take into careful consideration the former Governor's exit agreement and privacy law. For this reason, we extended consultation on the information and our response, including review by senior external counsel,' he said.
'On 5 March I was limited in what I could say about the former Governor's resignation both by the terms of his exit agreement and the fact that we were still working through finalisation of the detail of the next Five-Year Funding Agreement (FYFA).
'We were conscious of the need to explain to staff of the RBNZ the potential implications for staffing levels of a lower level of funding and needed time to consider the details of that.
'We are taking into account the feedback that we have received on our management of these OIA requests and looking carefully at how we can improve our response times in the future," Mr Quigley said.
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RNZ News
12 hours ago
- RNZ News
Will there be another cut in the OCR this week?
The Reserve Bank has been in an aggressive rate cutting mood since last August. Photo: RNZ To cut or not to cut? That is the question confronting the Reserve Bank's monetary policy committee this week. Economists and financial markets believe the committee will pause after six rate consecutive reductions since August last year. The Reserve Bank (RBNZ) has been in an aggressive rate cutting mood since it started last August, reducing the official cash rate (OCR) by 225 basis points from 5.5 percent to the current 3.25 percent, including three 50 basis point cuts. But times have changed, which the RBNZ showed in May with a rare vote in the committee resulting in a smaller cut, much emphasis on uncertainty - mentioned 164 times - and a declaration data would dictate the outlook. "It will be hard for the RBNZ to cut at this meeting given that post the MPS (May statement) it suggested market pricing would be a key driver of its decision," BNZ head of research Stephen Toplis said. "In some ways the RBNZ is in a comfortable spot. The market is not looking for a cut in July but still thinks another rate reduction is a done deal with the chance of more. The RBNZ thus will feel no need to rock the boat." Financial markets give less than a 20 percent chance of a rate cut this week, and about a 60 percent chance of a cut in late August. The RBNZ has maintained that core inflation has been falling towards its cherished 2 percent target point, despite a spike in food and other prices last month . But ASB economists changed their view recently from a 25 basis point cut to no change, because inflation pressures looked to be strengthening. "The RBNZ will need to be confident that higher short-term inflation does not risk stoking inflation expectations - this proved extremely difficult for the Bank to re-anchor in the previous cycle." ANZ chief economist Sharon Zollner was another saying the decision would be a close run thing for the RBNZ, but reluctantly expecting a no-change. "We think the RBNZ should cut. However, on balance we think the committee will decide it is prudent and low-cost to wait for more data on inflation - and inflation expectations - before cutting in August." If no cut this week, then when, and how many more? Opinion is divided, with Zollner expecting three more reductions to a low of 2.5 percent by early next year, as the inflation risk does not materialise and the economy stutters. "We see both consumption and non-tradable inflation undershooting RBNZ forecasts over the second half of the year, and therefore have a follow-up cut in November after another pause in October," adding that a third cut was possible early next year to combat any global headwinds. Kiwibank economists have been enthusiastic supporters of rate cuts to support the struggling economy. "Monetary policy is set today to influence the medium-term. And risks to the medium-term outlook are skewed to the downside." If there is a prevailing view, then presently it is the OCR will be taken to 2.75 or 3 percent, but that, like most things economic, is highly conditional. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Scoop
12 hours ago
- Scoop
It's An Eventful Week Ahead
Here's our take on current events It's a big week. For us of course, our focus is on the RBNZ's Monetary Policy Review on Wednesday. After six straight meetings delivering rate cuts, totalling 225bps, the RBNZ looks set to take a breather. The last time we heard from the RBNZ was, simply put, kind of weird. The May statement read dovish, with forecasts for the Kiwi economy appropriately downgraded. Similar to our house view, the RBNZ were clear to point out that trade uncertainty presents downside risks to growth and inflation. But the communication by RBNZ officials, along with the 1-5 dissenting vote, stopped short in signalling an easing bias consistent with their outlook and OCR track. Market pricing allows the RBNZ to skip this meeting, and come back in August without causing a stir. Just 3bps of a cut (12% chance) is priced in for Wednesday. For August, the market is pricing in 16bps (just shy of a 65% chance) of a rate cut. Wednesday's decision is another case of what we think they should do versus what we think they will do. While a hold is the likely outcome, we recommend a cut. The need for lower rates is clear. The RBNZ themselves have signalled the need for further cuts. So why wait? Yes, there is worry right now about the recent spike in inflation we're experiencing. But monetary policy makers must look through short-term volatility, even if it's eye-watering. Monetary policy is set today to influence the medium-term. And risks to the medium-term outlook are skewed to the downside. A global growth slowdown is expected with US tariffs. NZ export prices may come under pressure. Also, significant spare capacity remains within the Kiwi economy. Both these factors are disinflationary. And we've seen that in the QSBO survey. There is a net 2% of firms looking to reduce their prices in the coming months. History tells us that pricing behaviour like that only happens during recessions. All up, the real risk is that inflation undershoots the RBNZ's 2% midpoint. While the RBNZ may not pull the trigger this week, we expect them to maintain a dovish bias due to the balance of risks. Beyond the RBNZ, we'll also hear from the RBA this week. Meeting tomorrow, the RBA is expected to resume their easing cycle and deliver a 25bp cut to 3.60%. Having been late to hike, the RBA has also been late to cut. A cut tomorrow would mark just the third in this cycle. Compared to the 6 cuts we've had here at home. But the tides have turned. While the RBNZ has turned more ambiguous, the RBA has become more dovish. Because Aussie inflation is sitting at the lower end of the RBA's target band, and the labour market starting to lose its lustre. And of course, we can't forget that July 9th (US time) marks the deadline of President Donald Trump's 90 day pause on reciprocal tariffs. Now, with just 3 deals across the line out of the 70+ countries who were set to come to the negotiation table, an extension of some sort seems likely. That, or a mad dash of deals to the finish line for negotiations. Although we're now also hearing about a more 'Dear John' letter-style approach from Trump with the White House set to send letters to countries outlining its new tariff rate. Still, as we all know, no one can truly predict Donald Trump's next move. We expect a route of de-escalation to remain the path forward. But we remain wary of the risks at present. Just last week, Trump threatened Japan with a 30-35% tariff rate, up from their 23% liberation day tariff, if a deal wasn't reached before the July 9th deadline. Again, maybe it's just more big talk, but it's a reminder that no de-escalation is yet set in stone. And in any case, the ante is high over this week as we wait for developments to unfold. At least in some semi-positive news, a trade deal was struck between the US and Vietnam last week. Under the deal, the US will now impose a 20% tariff on Vietnamese exports, compared to the 46% announced on Liberation Day, but higher than the 10% of the last 3 months. Additionally, the agreement also sees the US implementing a 40% tariff on any products originating from another country sent through Vietnam for final shipment to the US – a shot likely fired towards China. Meanwhile in exchange, Vietnam is giving the US tariff-free access to its markets. Charts of the Week: The 'on the ground' business feel. Last week's Quarterly Survey of Business Opinion by NZIER showed that the gap between hopeful optimism and the harsh reality of daily business, continues to widen. Meanwhile firms are saying they are feeling less price pressure and passing on less pressure. The argument for stimulatory monetary policy is unequivocal. Price-related indicators suggest that inflation remains well-contained. Both cost and pricing indicators eased over the June quarter. Fewer firms reported an increase in costs, from half of firms to a net 42%. The improvement was likely supported by the recent appreciation in the Kiwi dollar after starting the year on the backfoot (trading in the 55-56c range). At the industry level, the experience however is mixed. Fewer retailers experienced higher costs over the quarter, while cost pressures have intensified in the building sector. A net 59% of builders reported increased costs, up from net 35% in Q1). Despite this, the building sector reported the biggest fall in pricing – from a net 3% raising their prices last quarter, to a net 35% decreasing their prices. Meanwhile, pricing across retailers held steady. Overall, the weak demand environment continues to weigh on firms' pricing power. A net 1% of firms had dropped their prices over the quarter, and a net 2% expect to do the same in the coming quarter. Outside of the Covid pandemic, 2009 was the last time the survey pointed to an expectation for price declines. Another piece of good news to come out of the survey was the long awaited lift in investment intentions. After 13 consecutive quarters of negative investment intentions (excluding a short-lived blip following the election), investment intentions are finally back in the black. Well, mostly. A net 1% of firms are still planning on reducing investment in buildings. But a net 8% of firms are planning to get back to investing in plant and machinery over the coming year. The Government's 'Investment Boost' scheme has likely helped get some firms off the side lines. But we imagine others will still be holding off until they have more conviction about a sustained recovery in demand. Looking over at hiring, firms continued to cut headcount over Q2, though fewer than over Q1. A net 12% of firms reduced staff numbers in the June quarter compared with the net 17% in the March quarter. Although it seems hiring in the quarter ahead seems more promising with a net 4% of firms looking at expanding headcount. Check out our full review – Reality bites, as business optimism improves.
Scoop
a day ago
- Scoop
Fresh Push For Four-Lane Highway From Rolleston To Ashburton
Article – Jonathan Leask – Local Democracy Reporter A local woman is renewing the campaign for State Highway 1 between Rolleston and Ashburton to be increased to four lanes. A woman fed up with seeing near-misses is campaigning for State Highway 1 between Rolleston and Ashburton to be increased to four lanes. Rachel Gillard-Tew launched a petition this week calling on the government to reconsider four-laning the 63km stretch of road. 'State Highway 1 is the lifeline connecting communities across New Zealand, and the section between Rolleston and Ashburton is crying out for attention. 'Despite its importance, it remains a single-lane hazard.' Her motivation stems from a personal connection to 'a catastrophic accident on SH1' and, as a regular traveller along SH1, witnessing plenty of close calls. With Rolleston and surrounding towns continuing to develop, traffic would only increase, she said. 'The potential for devastating accidents increases by the day. 'It's time SH1 is also prioritised.' With the range of vehicle sizes and speeds, it creates a stressful environment where people lose patience and take risks, she said. 'There is no room for error at all with no protection from oncoming traffic. 'The lack of safe intersections and an adequate median barrier makes this highway section particularly perilous. 'The need for immediate action is clear and compelling.' Creating four lanes between Rolleston and Ashburton would save lives and reduce the unnecessary risks faced by commuters and holiday travellers, she said. The major hurdle is, and has always been, the cost. Adding two lanes from Rolleston to Ashburton will require the extension or construction of new two-lane bridges at the Selwyn and Rakaia rivers. Four-lanes 'unaffordable' Former Selwyn District councillor Mark Alexander said that four-laning between Rolleston and Ashburton is 'unaffordable for our region and country'. He said a second bridge at Rakaia is needed for resilience and 'more maintenance of the existing roadway is needed'. 'We need more schools and better healthcare, more than a motorway between Ashburton and Rolleston.' Alexander sat on the Greater Christchurch Partnership and Regional Transport Committee during his time on the council, between 2010 and 2022, and said the 'cost-benefit ratio was not favourable' for four lanes. He was referencing a business case looking at traffic solutions on SH1 between Christchurch and Dunedin, which was ready for the NZTA Board in 2017. Instead, the National-led government announced its roads of national significance policy that included four lanes from Christchurch to Ashburton. National lost the election later that year, and the roads of national significance were scrapped by the incoming Labour-led coalition Government. The business case, released under the Official Information Act, shows the preferred option was not four lanes. It included a second bridge in Ashburton and a series of '2+1' lanes, essentially alternating passing lanes between Christchurch and Ashburton. What's NZTA planning? NZTA hasn't ruled out four-laning in future, but it is not part of the National Land Transport Plan 2024-27. Regional manager for system design Rich Osborne said NZTA is investing in safety measures on SH1 between Lyttelton and Timaru ports. He said NZTA is aware of safety concerns about the busy State Highway 1 corridor, as raised in the petition. Safety improvement works are being planned and undertaken, he said. 'Providing for wide centrelines has been a recent focus of safety improvements. 'This creates more space between lanes and keeps vehicles further apart, which can reduce serious crashes resulting in death and serious injuries. 'Recent work has included widening of the southbound shoulder of SH1 south of Rolleston, between Dunns Crossing Road and Burnham Road, to install a wide centreline.' Further improvements over the next few years include building a second Ashburton bridge, the Rolleston access improvements project, and a new roundabout at the Burnham Road/Aylesbury Road intersection. A stretch south of Hinds and 2km at Rolleston have had centre line widening and more is being planned, but not until the next three-year land transport plan. 'Pre-implementation work, including detailed design and some property acquisition work, is underway for wide centrelines and some widening works for sections of State Highway 1 from Burnham Road to Selwyn River, south of Selwyn River to north of Rakaia, and south of Rakaia to north of Ashburton. 'As part of its long-term forward planning, NZTA is exploring future options for improving the SH1 corridor between Lyttelton and Timaru ports, and this includes looking at replacement of SH1 bridges, the role of rail and the potential introduction of four-laning.' National's vision on hold National first proposed four-laning the highway ahead of the 2017 election, and the policy was resurrected at the 2020 election. The party had promised to investigate its viability in the lead-up to the 2023 election. When it released its National Land Transport Plan in 2024, National's Roads of National Significance were back, with 15 new four-lane roading projects across the country – including the Woodend Bypass, but not between Ashburton and Rolleston. Rangitata MP, and South Island Minister, James Meager said the idea needed to be reevaluated. 'We need to do the work to see how it stacks up – the last time anyone looked at it seriously was in 2017, before Labour came into government. 'My main focus is getting construction started on the second Ashburton bridge and making progress on our other major South Island roading projects.'
