Reserve Bank Governor Adrian Orr resignation: No reason given for departure
The rumour mill is turning, following Reserve Bank of New Zealand Governor Adrian Orr’s shock resignation ahead of his second five-year term ending in 2028.
The Reserve Bank (RBNZ) on Wednesday afternoon announced Orr would stand down as Governor immediately and depart the central bank on March 31.
Reserve Bank board chair Neil Quigley fronted the media at the Reserve Bank Museum in Wellington at 5pm.
Deputy Governor Christian Hawkesby will be acting governor until March 31, after which time Finance Minister Nicola Willis will appoint someone to the role for up to six months, on the recommendation of the RBNZ board.
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Cameron Smith
The acting governor Christian Hawkesby was the acting governor as of midday today, Quigley said.
Cameron Smith
Quigley did not say whether the way Orr had resigned was satisfactory to him as board chair.
"It's not a question of whether it is satisfactory to me, it's just what's happened," Quigley said.
Cameron Smith
Quigley said they were "working with the Government [around] some policy issues, some funding issues".
Cameron Smith
He's [Adrian Orr] decided that he's on leave and he's comfortable with that decision, Quigley said when asked about why Orr was not fronting.
Cameron Smith
"We are working through some views about the funding of the Bank. The Board is in the process of finalising its submission to the minister," Quigley said when asked whether the resignation had anything to do with the Bank's five-year funding agreement.
Cameron Smith
When asked whether Orr enjoyed the board's confidence, Quigley said he retained his confidence as chair.
He did not speak on behalf of the rest of the board.
Quigley said there were no conduct issues outstanding.
Cameron Smith
"He has achieved a great deal of what he set out to do when he took that job. We have been through a lot - not just the pandemic," Quigley said, listing the change to a committee model for monetary policy.
Cameron Smith
"It is a personal decision that he has made. He feels it is the right time for him to make that decision," Reserve Bank Board Chair Neil Quigley said.
Reserve Bank Board Chair to front media at 5pm
Cameron Smith
Reserve Bank Board Chair Neil Quigley will be speaking to media at 5pm following the resignation of Governor Adrian Orr earlier this afternoon.
Professor Robert MacCulloch: Central bank 'has failed Kiwis'
Cameron Smith
Professor Robert MacCulloch, Matthew S. Abel Chair of Macroeconomics at Auckland University, has been an outspoken critic of Orr in the past few years.
Asked about Orr's legacy in the wake of his resignation MacCulloch said: “The country’s not doing well."
“You can always say it’s a clash of personalities and other factors. But my view is that at a very deep level, Orr bore a lot of responsibility for the stagnation of the country and he knows it. I think [the central bank] has failed Kiwis.”
Cameron Smith
David Seymour comments on Orr's resignation
Cameron Smith
Asked for his reflections on Adrian Orr’s time as Reserve Bank Governor, Associate Finance Minister David Seymour said he “had heard people say, ‘farewell and thanks for the inflation’”.
Considering Seymour was speaking to media less than 10 minutes after the resignation was announced, the Herald asked who had said that.
“I can’t remember. Someone just whispered it to me on the way here," Seymour said.
"Ultimately, this is a guy who had a really important job to do. He has now moved on.
"I think what’s really important is we get a really good person in the position next because if the last five years have shown anything it’s how important the Reserve Bank Governor role is.
"The pain people have felt through the cost of living crisis over the last five years shows we need to get a great Reserve Bank Governor and that’s up to the board.”
Adrian Orr’s seven years as Reserve Bank Governor
Cameron Smith
- Appointed Reserve Bank Governor in March 2018.
- In March 2020, the Official Cash Rate (OCR) is cut from 1% to 0.25% in response to Covid.
- Its quantitative easing programme during Covid saw an estimated $71 billion of money printing.
- Presided from 2021 until last year over an era of rising inflation and interest rates. Inflation peaked at a 32-year high of 7.3%.
- In October 2021, OCR is lifted to 0.50%. It would reach 5.5% by May 2023.
- Reappointed for a second five year term in November 2022.
- In August 2024, OCR is cut for the first time since Covid to 5.25%. It currently sits at 3.75%.
- September quarter 2024, inflation falls to 2.2% - within the Reserve Bank's 1-3% target.
'We didn't get everything right' - Brad Olsen on inflation fight
Cameron Smith
While there had been criticism about the Reserve Bank acting too slowly to cut the OCR, Infometrics' Brad Olsen said they had managed to get inflation down to 2.2% which was close to the mid-point of its 1 to 3% target.
"So at the moment, things are in a better spot."
But Olsen said in hindsight looking back at 2021 the economy was starting to build up a head of steam.
"There wasn't as much need to massively stimulate the economy.
"It certainly contributed to where we got to with inflation...and it does look like we have had one of the worst landings in the OECD. We didn't get everything right."
Asked about the Reserve Bank's role in quantitative easing, Olsen said the government had to borrow a lot during Covid but the Reserve Bank didn't have to buy it all.
"There was certainly a need to keep the market functioning...the Reserve Bank has in the past and certainly did during Covid had to go in and buy some stuff and sell some stuff to keep the pipes moving when it came to bond activity...that was definitely true.
"But the Reserve Bank also for the first time in monetary policy history took a very definitive view that it was going to do more of that with a deliberate view to using that to influence monetary policy...to influence interest rates."
Olsen said there were questions to be asked about that.
Nicola Willis leaves House, avoids media
Cameron Smith
Finance Minister Nicola Willis wouldn't speak to media after she left the House.
The Herald asked why she wouldn't say why Adrian Orr had resigned. She did not respond and kept walking.
Willis used a corridor to leave the House that meant she didn't need to walk past media waiting on Parliament's black and white tiles.
Associate Finance Minister: 'I am not his employer'
Cameron Smith
Chris Bishop, who is the associate Finance Minister, said the matter of the resignation is one for the Reserve Bank board.
“It’s not an issue for me. I am not his employer. You will need to talk to the board.”
He wouldn’t say if the lack of explanation was good enough.
'This is super out of the blue' - Brad Olsen
Cameron Smith
Brad Olsen, the chief executive and principal economist at Infometrics, told Newstalk ZB he was stunned how quickly Orr was leaving the RBNZ.
"It looks like the governor is going effective immediately. This is super out of the blue."
Asked if Orr had received a political push, Olsen said the announcement seemed to be more driven by Orr.
"And that's the way it should be...no matter what the government of the day...it shouldn't have any real influence over that."
Olsen told Newstalk ZB if there was going to be pressure from a new government it would have been when they came in rather than a year and a bit later.
Orr was reappointed by former Finance Minister Grant Robertson in 2022 - a move highly criticised by National at the time.
Olsen said the opposition's objection wasn't personal. "There was just a difference of view."
"The fact that that appointment went through with political disagreement...that hampered the idea of political neutrality on the Reserve Bank at the time."
Orr faced a lot of criticism over his tenure.
Olsen said there had been a lot of challenges during Orr's time as governor which were completely out of the Reserve Bank's control.
"But in fairness, that's also the job. We don't appoint the Reserve Bank, the governor and board to manage through business as usual...they have to be able to respond to whatever gets thrown at them."
Who is new Acting Governor Christian Hawkesby?
Cameron Smith
Christian Hawkesby has been with the Reserve Bank since 2019.
He was appointed deputy governor in 2022.
Prior to that he was part of the team that set up Harbour Asset Management. Before that he spent nine years at the Bank of England where he held senior positions including private secretary to the deputy governor, chief manager of sterling markets and head of market intelligence.
Hawkesby graduated from the University of Canterbury with a Master of Commerce (Hons) majoring in Economics.
How much Adrian Orr made last year
Cameron Smith
The Reserve Bank's annual report shows Orr earned $804,802 in total remuneration for the year to June 30, 2024.
Prime Minister comments on Orr's resignation
Cameron Smith
Prime Minister Christopher Luxon would not be drawn on the reason for Orr's resignation.
"I appreciate there'll be lots of commentary about it. I'm not going to climb in on that as Prime Minister, I respect the independence of the Governor and the Reserve Bank."
Cameron Smith
Finance Minister deflects questions over Orr's resignation
Cameron Smith
Asked why the announcement was being made now, ahead of the conference, Willis said the timing was “the choice of Adrian Orr”.
She also said the fact he was leaving immediately was a matter for Orr.
Asked whether she had confidence in Orr’s conduct to date, Willis said that was a question for the Reserve Bank board, not her.
“Questions of that nature are for the Reserve Bank board and I’m not going to be a commentator on them. I’m sure that over the next few days people will have all sorts of things to say about Adrian Orr’s tenure at the Reserve Bank.
“I’ve made my comments on the performance of the Reserve Bank quite clear as opposition finance spokesperson, and I don’t intend to say anymore today.
“I’m not going to characterise the reasons for Adrian Orr’s resignation, those reasons are his own.
Finance Minister tight-lipped on Orr decision
Cameron Smith
Finance Minister Nicola Willis wouldn’t elaborate on why Orr was leaving.
“This is a decision that the Reserve Bank governor has come to. And it is therefore for him to characterise,” she said.
Willis said she had been aware for the past few days that there had been discussions between the Reserve Bank board and governor.
Asked whether the board had confidence in Orr, Willis said it was a question for the board to answer.
The announcement comes the day before the Reserve Bank hosts an international conference to mark 35 years of inflation targeting.
Central bankers from around the world, including former Federal Reserve chair Ben Bernanke, are the among the guests in New Zealand for the conference.
‘There is room for savings’ - Willis on Reserve Bank
Cameron Smith
Finance Minister acknowledges outgoing RBNZ Governor
Scott Palmer
Finance Minister Nicola Willis has acknowledged the resignation of Orr after seven years in his role.
“I wish him well for the future,” Willis says.
She also welcomes Deputy Governor Christian Hawkesby to his role as Acting Governor until March 31.
Hawkesby has served as Reserve Bank Deputy Governor since 2022.
Acting Governor revealed
Scott Palmer
Deputy Governor Christian Hawkesby will be Acting Governor until 31 March.
From 1 April the Minister of Finance, on recommendation from the RBNZ Board, will appoint a temporary Governor for a period of up to six months.
Hawkesby will also chair the Monetary Policy Committee.
RBNZ board chair thanks Orr
Scott Palmer
RBNZ board chair Professor Neil Quigley thanked Orr for his leadership and commitment to the central bank.
“Adrian has been critical to leading the institutional reforms needed to implement the new Reserve Bank Act, Deposit Takers Act, and Depositor Compensation Scheme," he said.
“He has also driven a significant uplift in leadership and capability across the Bank, and modernised its culture to reflect contemporary New Zealand society.”
RBNZ Governor Adrian Orr resigns
Scott Palmer
Reserve Bank of New Zealand Governor Adrian Orr has resigned and will finish on 31 March.
In a statement, Orr said it has been a privilege to lead the bank.
“Over the last seven years we’ve significantly built our capability and capacity so we can respond to an increasing complex and challenging global environment.
"We’ve made considerable progress in our approach to monetary and financial policy, alongside driving much-needed maturity uplifts in our balance sheet capital, digital, data and technology.
“We’ve advanced many major, multi-year programmes, to modernise and strengthen the RBNZ and the New Zealand financial system and led the implementation of strategies related to the Future of Money and Cash, Future of Payment and Settlements, Financial Inclusion, Climate Change, and Māori Access to Capital.”
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The RBNZ didn’t provide a reason for Orr’s sudden departure, unveiled the day before the RBNZ hosts a major international conference (attended by the likes of former Federal Reserve chair Ben Bernanke) to mark 35 years of inflation targeting.
Orr’s move comes as the RBNZ clashes with Finance Minister Nicola Willis over the amount of funding it receives from the Government.
It also comes as Willis considers requiring the RBNZ to change the way it regulates banks, including its controversial bank capital rules, to support more competition in the sector.
Speaking to media, RBNZ board chair Neil Quigley acknowledged there were “issues” the bank was working through.
“The board is in the process of finalising its submission to the minister about our next funding agreement,” he said.
“That conversation about funding has involved the normal challenges that you would expect and has been constructive.”
Speaking to the Herald last week, Willis suggested the RBNZ may need to trim its expectations over the amount of funding it receives, and may need to brace for a funding cut.
She wouldn’t elaborate on why Orr was leaving.
“This is a decision that the Reserve Bank Governor has come to. And it is therefore for him to characterise,” she said.
Willis said the secretary to the Treasury Iain Rennie had informed her the RBNZ board had been in conversations with Orr about a possible resignation.
She said she’d been aware of these discussions over the past few days.
Asked whether she had confidence in Orr’s conduct to date, Willis said, “Questions of that nature are for the RBNZ board and I’m not going to be on a commentator on them.
“I’m sure that over the next few days people will have all sorts of things to say about Adrian Orr’s tenure at the RBNZ.
“I’ve made my comments on the performance of the RBNZ quite clear as Opposition finance spokesperson, and I don’t intend to say anymore today.”
When in Opposition, Willis said she was “appalled” by then Finance Minister Grant Robertson’s decision to reappoint Orr governor for a second term, starting in 2023, without first completing an independent review of the RBNZ’s performance.
Inflation sat above the RBNZ’s 1-3% target range for three years under Orr’s watch, hitting 7.2% in the June quarter of 2022, before finally falling within target by the September quarter of 2024.
While Covid-era travel restrictions and the war in Ukraine limited supply in the economy relative to demand, the RBNZ was widely criticised for helping cause inflation by over-stimulating the economy.
In a statement, Orr said: “I leave the role with Consumers Price Inflation at target, and an economy in a cyclical recovery following the long period of Covid-related disruption.
“The financial system remains sound.
“However, there is much work left to do on the major multi-year strategies RBNZ is following. Ongoing focus and funding will be critical to these projects’ success.”
Orr won’t attend the conference the RBNZ is hosting.
The Herald was told it couldn’t attend in person, as there wasn’t enough room and it was being livestreamed.
RBNZ board chair Neil Quigley (who Willis reappointed to the role, despite her complaints about the RBNZ’s performance) thanked Orr for his leadership.
“Adrian has been critical to leading the institutional reforms needed to implement the new Reserve Bank Act, Deposit Takers Act, and Depositor Compensation Scheme,” Quigley said.
“In particular, Adrian has demonstrated resilience and fidelity to the Bank in operationalising the changes in governance and decision-making that followed from the creation of a Monetary Policy Committee with external members from 2019, and the Reserve Bank Act coming into force in July 2022.”
The new responsibilities the RBNZ has taken on under the new legislation has seen the organisation grow a lot.
The change also ruffled a feathers, with 10 of the bank’s 26 most senior staff leaving in late-2021/early-2022, including Deputy Governor at the time Geoff Bascand.
Coming back to Orr, the outgoing governor said: “We’ve advanced many major, multi-year programmes, to modernise and strengthen the RBNZ and the New Zealand financial system and led the implementation of strategies related to the future of money and cash, future of payment and settlements, financial inclusion, climate change, and Māori access to capital.
“I’m incredibly proud of the RBNZ’s people, our work and the impact of our mahi on all New Zealanders.”