March 4, 2025 • 8 mins
Industry experts have voiced their surprise after the Reserve Bank Governor abruptly resigned today.
Adrian Orr was almost halfway through his second five-year term.
Infometrics Principal Economist Brad Olsen joined the Afternoons team to speculate about what could have caused this.
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Speaker 1 (00:09):
You're listening to a podcast from newstalk zed be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Adrian or He is stepping down as Reserve Bank governor
at the end of this month. He made the announcement today,
four years before the end of his second five year term.
To discuss further, we're joined by Brad Olsen, CEO of
infor Metrics. Get a brand good afternoon.
Speaker 3 (00:32):
Now, Brad, it has been said that the Reserve Bank
and Adrian who were created crisis by moving too slowly
and then had to engineer a recession to deal with
that mistake. Is that fair and if so, when did
the Reserve Bank start making mistakes?
Speaker 4 (00:48):
Oh?
Speaker 5 (00:48):
I think look, that have certainly been criticisms over time,
and hindsight is a little bit twenty twenty in terms
of moving too so on probably both the up and
the downside. I mean you look through parts of twenty
twenty one and inflation was clearly getting going much quicker
than the Reserve Bank at the time picked up on
we were looking at the numbers just for and inflation
(01:10):
over the governor's tenure has been above three percent, so
effectively outside of the band now yes, there's been a
lot of global factors in that as well, but certainly
a challenging time on the inflation front, and I don't
think that the reserve banks sort of ability to get
inflation under control, and certainly the confidence of the market
(01:30):
has been as under pressure as in recent years. But
in fairness, inflation is now back under control. So at
the very least, you know, the reserve banks inflation fighting
credentials are a bit more back than before. I mean,
look to be honest, though, guys, I mean that this
was still we're a bit stunned by how quickly this
has come about. I mean, it looks like the government
(01:50):
is effective immediately, almost not working, given that there'd be
no reason to point enacting governor until the end of
the month if he was going to keep going. So
this is super out of the blue.
Speaker 2 (02:01):
And so do you think this is a political push
out the door or the governor himself made this decision?
How do you read that brand? It's a difficult one.
Speaker 5 (02:12):
I know everything I've seen so far, and you know,
we're still trying to wrap half our heads around what's
going on.
Speaker 4 (02:20):
It does seem to be much more driven.
Speaker 5 (02:22):
I ad rendlaw personally, and that I think is the
way that it should be. Almost no matter what, the
government of the day can't shouldn't have any real influence
over that. And so the discussion looks like from the
public reporting that we've seen so far has been more
between the board and the outgoing governor. That's appropriate, I
(02:43):
guess sort of it would be an unusual time for
there to feel like there was any political pressure as well.
You know, interest rates are coming down if there was
going to be political pressure from you know, a new government,
and there shouldn't be, but if there was, it would
presumably be when the new government came in rather than
a year and bit after. So it's a little bit
(03:05):
hard to wrap your head around that place that I'm
sitting in at the moment.
Speaker 3 (03:08):
When you talk about politics. Would it be safe to
say that Grant Robertson dunt Adrian Or on the new government.
And if that's the case, what did Grant Robertson think
that Adrian Or could do for the economy that a
replacement couldn't.
Speaker 4 (03:23):
Look I think at the.
Speaker 5 (03:24):
Time when the governor was reappointed, I think it was
sort of an unsavory period of politicking putting the Reserve
Bank and the governor themselves aside for a moment. You know,
the expectation is that there is you know, discussion and
sort of at least tacit agreement for a governor appointment,
and that's generally happened over time.
Speaker 4 (03:44):
And I know that.
Speaker 5 (03:45):
You know, when we last had Adrian or appointed for
his extended term, it wasn't disagreement from the then opposition.
That was nothing personal against him. There was just a
difference of view. And so the fact that that appointment
went through with political disagreement, I think that that hampered,
you know, the idea of political neutrality on the Reserve
(04:08):
Bank at the time. I don't think there's any caste
dispersions at the moment, but like I say, I mean,
I think it's unhelpful when politicians meddle, and at that point,
Robertson as Finance Minister had meddled.
Speaker 2 (04:22):
In my view, he's had a lot of criticism over
his tenure. Bread does he deserve and the wider Reserve Bank,
do they deserve some sympathy with what they had to
deal with.
Speaker 5 (04:34):
Oh, there's obviously been a lot of challenges that were
completely out of their control that they had to blind
react to. But in fairness, that's also the job that
we don't appoint the Reserve Bank, you know, governor and
the board to sort of just manage through business as usual.
That they have to be able to respond to whatever
gets thrown at them and to be fair, look again, things,
(04:56):
you know, criticisms have been around the Reserve Bank, sometimes
too slow. But today we have inflation that's at two
point two percent of the latest measured figure, almost as
close as you can get with a bit of normal
variation to the midpoint of that one point one to
three percent target. That there is a bankers taskworth So
(05:16):
at the moment, things are in a bit of spot.
Speaker 4 (05:20):
Yes, there have been a lot of challenges.
Speaker 5 (05:22):
You look the likes of the Russian invasion of Ukraine
which sent fuel prices going higher. You look at the
general supply shock from the pandemic. All of that was
very much there. But I think with again hindsight, you
look back at particularly twenty twenty one and go, well,
actually the economy was clearly starting to build up a
head of steam at that point. It wasn't as much
(05:43):
need to massively stimulate the economy. We kept doing so,
and that certainly contributed to where we got with inflation.
Not the only response, but it wasn't helpful either.
Speaker 3 (05:53):
Yeah, and it does look like we had one of
the worst you know landings, as we've been saying in
the OECD. So you know, we didn't get everything right. Now,
there's a lot of texts coming through saying, you know,
blaming Adrian or for the quantity of easing of the
last government. But what role does the Reserve Bank have
in quantitive easing?
Speaker 5 (06:12):
Well, I think that that's sort of the challenge. Yes,
the government had to borrow a lot, the Rezero Bank
didn't have to buy it all that. There is certainly
a need to keep the market functioning, and so the
Reserve Bank has in the past and certainly did during
COVID have to go in and buy some stuff and
sell some stuff to sort of keep the pipes moving.
When it came to you know, bond activity and all.
Speaker 4 (06:34):
That sort of thing. That was definitely true.
Speaker 5 (06:36):
But the Reserve Bank also, for the first time in
monetary policy history in New Zealand at least, took a
very definitive view that actually it was going to do
more of that with a deliberate view to using that
to influence monetary policy, to influence interest rates, to influence
you know, how easy or not the economy had a
pass in front of it. So that was a deliberate choice.
(06:57):
It happened certainly, very rapidly, and I don't know if
we've fully come to grips with how that changed the
game and what it would mean for the future. So
I do think again there's questions to be asked, but
to be fair, and I think probably the most important thing,
because we're talking about a person here at the end
of the day, adrian Or has always been willing to
front up.
Speaker 4 (07:14):
There's been disagreements you know.
Speaker 5 (07:16):
That have come through around monetary policy, stances and decisions,
but he's always been fronting up. He's always sort of
delivered his message. There might have been differences on what
that message conveyed, but he put it forward and he
put it forward strongly.
Speaker 2 (07:29):
So all in all, Brad, what do you think adrien
Or's legacy will be as reserve being governor?
Speaker 4 (07:35):
I think it's a bit too early to write that
one fully.
Speaker 5 (07:38):
I mean, he's technically stilling the role, and.
Speaker 4 (07:40):
You know, we always want to see a bit more data.
Speaker 5 (07:43):
But like I say, inflation got out of control.
Speaker 4 (07:47):
On his watch.
Speaker 5 (07:48):
Wasn't fully his hopeful that at all, but he was
the person tasked who getting it back in order. There
have been some challenges along the way, I certainly think't
here were some missteps, if you know, from different people's view,
probably including mine. But at the very least he hasn't
tried to abandon ship midway through the processes actually got
(08:08):
inflation under control. Would have been very different tones I
think of thought coming from people if you had gone
when inflation must say seven percent. So at least he's
leaving with things in the white starting position.
Speaker 2 (08:19):
Brad, always fantastic to get your analysis. Thank you very
much and we'll chat again soon. Brilliant that is Brad Olsen,
Infametrics chief, chief executive and principal economists.
Speaker 1 (08:31):
For more from News Talks, a'd be listen live on
air or online and keep our shows with you wherever
you go with our podcast on iHeartRadio.
You're listening to a podcast from newstalk zed be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Adrian or He is stepping down as Reserve Bank governor
at the end of this month. He made the announcement today,
four years before the end of his second five year term.
To discuss further, we're joined by Brad Olsen, CEO of
infor Metrics. Get a brand good afternoon.
Speaker 3 (00:32):
Now, Brad, it has been said that the Reserve Bank
and Adrian who were created crisis by moving too slowly
and then had to engineer a recession to deal with
that mistake. Is that fair and if so, when did
the Reserve Bank start making mistakes?
Speaker 4 (00:48):
Oh?
Speaker 5 (00:48):
I think look, that have certainly been criticisms over time,
and hindsight is a little bit twenty twenty in terms
of moving too so on probably both the up and
the downside. I mean you look through parts of twenty
twenty one and inflation was clearly getting going much quicker
than the Reserve Bank at the time picked up on
we were looking at the numbers just for and inflation
(01:10):
over the governor's tenure has been above three percent, so
effectively outside of the band now yes, there's been a
lot of global factors in that as well, but certainly
a challenging time on the inflation front, and I don't
think that the reserve banks sort of ability to get
inflation under control, and certainly the confidence of the market
(01:30):
has been as under pressure as in recent years. But
in fairness, inflation is now back under control. So at
the very least, you know, the reserve banks inflation fighting
credentials are a bit more back than before. I mean,
look to be honest, though, guys, I mean that this
was still we're a bit stunned by how quickly this
has come about. I mean, it looks like the government
(01:50):
is effective immediately, almost not working, given that there'd be
no reason to point enacting governor until the end of
the month if he was going to keep going. So
this is super out of the blue.
Speaker 2 (02:01):
And so do you think this is a political push
out the door or the governor himself made this decision?
How do you read that brand? It's a difficult one.
Speaker 5 (02:12):
I know everything I've seen so far, and you know,
we're still trying to wrap half our heads around what's
going on.
Speaker 4 (02:20):
It does seem to be much more driven.
Speaker 5 (02:22):
I ad rendlaw personally, and that I think is the
way that it should be. Almost no matter what, the
government of the day can't shouldn't have any real influence
over that. And so the discussion looks like from the
public reporting that we've seen so far has been more
between the board and the outgoing governor. That's appropriate, I
(02:43):
guess sort of it would be an unusual time for
there to feel like there was any political pressure as well.
You know, interest rates are coming down if there was
going to be political pressure from you know, a new government,
and there shouldn't be, but if there was, it would
presumably be when the new government came in rather than
a year and bit after. So it's a little bit
(03:05):
hard to wrap your head around that place that I'm
sitting in at the moment.
Speaker 3 (03:08):
When you talk about politics. Would it be safe to
say that Grant Robertson dunt Adrian Or on the new government.
And if that's the case, what did Grant Robertson think
that Adrian Or could do for the economy that a
replacement couldn't.
Speaker 4 (03:23):
Look I think at the.
Speaker 5 (03:24):
Time when the governor was reappointed, I think it was
sort of an unsavory period of politicking putting the Reserve
Bank and the governor themselves aside for a moment. You know,
the expectation is that there is you know, discussion and
sort of at least tacit agreement for a governor appointment,
and that's generally happened over time.
Speaker 4 (03:44):
And I know that.
Speaker 5 (03:45):
You know, when we last had Adrian or appointed for
his extended term, it wasn't disagreement from the then opposition.
That was nothing personal against him. There was just a
difference of view. And so the fact that that appointment
went through with political disagreement, I think that that hampered,
you know, the idea of political neutrality on the Reserve
(04:08):
Bank at the time. I don't think there's any caste
dispersions at the moment, but like I say, I mean,
I think it's unhelpful when politicians meddle, and at that point,
Robertson as Finance Minister had meddled.
Speaker 2 (04:22):
In my view, he's had a lot of criticism over
his tenure. Bread does he deserve and the wider Reserve Bank,
do they deserve some sympathy with what they had to
deal with.
Speaker 5 (04:34):
Oh, there's obviously been a lot of challenges that were
completely out of their control that they had to blind
react to. But in fairness, that's also the job that
we don't appoint the Reserve Bank, you know, governor and
the board to sort of just manage through business as usual.
That they have to be able to respond to whatever
gets thrown at them and to be fair, look again, things,
(04:56):
you know, criticisms have been around the Reserve Bank, sometimes
too slow. But today we have inflation that's at two
point two percent of the latest measured figure, almost as
close as you can get with a bit of normal
variation to the midpoint of that one point one to
three percent target. That there is a bankers taskworth So
(05:16):
at the moment, things are in a bit of spot.
Speaker 4 (05:20):
Yes, there have been a lot of challenges.
Speaker 5 (05:22):
You look the likes of the Russian invasion of Ukraine
which sent fuel prices going higher. You look at the
general supply shock from the pandemic. All of that was
very much there. But I think with again hindsight, you
look back at particularly twenty twenty one and go, well,
actually the economy was clearly starting to build up a
head of steam at that point. It wasn't as much
(05:43):
need to massively stimulate the economy. We kept doing so,
and that certainly contributed to where we got with inflation.
Not the only response, but it wasn't helpful either.
Speaker 3 (05:53):
Yeah, and it does look like we had one of
the worst you know landings, as we've been saying in
the OECD. So you know, we didn't get everything right. Now,
there's a lot of texts coming through saying, you know,
blaming Adrian or for the quantity of easing of the
last government. But what role does the Reserve Bank have
in quantitive easing?
Speaker 5 (06:12):
Well, I think that that's sort of the challenge. Yes,
the government had to borrow a lot, the Rezero Bank
didn't have to buy it all that. There is certainly
a need to keep the market functioning, and so the
Reserve Bank has in the past and certainly did during
COVID have to go in and buy some stuff and
sell some stuff to sort of keep the pipes moving.
When it came to you know, bond activity and all.
Speaker 4 (06:34):
That sort of thing. That was definitely true.
Speaker 5 (06:36):
But the Reserve Bank also, for the first time in
monetary policy history in New Zealand at least, took a
very definitive view that actually it was going to do
more of that with a deliberate view to using that
to influence monetary policy, to influence interest rates, to influence
you know, how easy or not the economy had a
pass in front of it. So that was a deliberate choice.
(06:57):
It happened certainly, very rapidly, and I don't know if
we've fully come to grips with how that changed the
game and what it would mean for the future. So
I do think again there's questions to be asked, but
to be fair, and I think probably the most important thing,
because we're talking about a person here at the end
of the day, adrian Or has always been willing to
front up.
Speaker 4 (07:14):
There's been disagreements you know.
Speaker 5 (07:16):
That have come through around monetary policy, stances and decisions,
but he's always been fronting up. He's always sort of
delivered his message. There might have been differences on what
that message conveyed, but he put it forward and he
put it forward strongly.
Speaker 2 (07:29):
So all in all, Brad, what do you think adrien
Or's legacy will be as reserve being governor?
Speaker 4 (07:35):
I think it's a bit too early to write that
one fully.
Speaker 5 (07:38):
I mean, he's technically stilling the role, and.
Speaker 4 (07:40):
You know, we always want to see a bit more data.
Speaker 5 (07:43):
But like I say, inflation got out of control.
Speaker 4 (07:47):
On his watch.
Speaker 5 (07:48):
Wasn't fully his hopeful that at all, but he was
the person tasked who getting it back in order. There
have been some challenges along the way, I certainly think't
here were some missteps, if you know, from different people's view,
probably including mine. But at the very least he hasn't
tried to abandon ship midway through the processes actually got
(08:08):
inflation under control. Would have been very different tones I
think of thought coming from people if you had gone
when inflation must say seven percent. So at least he's
leaving with things in the white starting position.
Speaker 2 (08:19):
Brad, always fantastic to get your analysis. Thank you very
much and we'll chat again soon. Brilliant that is Brad Olsen,
Infametrics chief, chief executive and principal economists.
Speaker 1 (08:31):
For more from News Talks, a'd be listen live on
air or online and keep our shows with you wherever
you go with our podcast on iHeartRadio.
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