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The Reserve Bank is blocking attempts to find out whether Graeme Wheeler's advisers supported his decision to raise interest rates in 2014.Michael Reddell, a former senior economic advisor to the Reserve Bank, used the Official Information Act to attempt to find out how Wheeler's advisers had voted when the central bank was making interest rate decisions since 2013.
It followed Wheeler claiming in a newspaper interview that March's surprise decision to cut the official cash rate (OCR) by 25 basis points to a record low of 2.25 per cent was unanimously backed by the bank's monetary policy committee.
Former Reserve Bank economic advisor turned blogger Michael Reddell says it is "preposterous" that releasing the vote ...
DAVID WHITE/FAIRFAX NZ
Former Reserve Bank economic advisor turned blogger Michael Reddell says it is "preposterous" that releasing the vote numbers on historic OCR decisions could harm New Zealand's economic interests.
"[W]e have 13 people who give advice to the governing committee who make these decisions and the advice from the 13 was unanimous," Wheeler reportedly told NZME.
Reddell asked for the votes on every OCR decision since 2013, but the Reserve Bank blocked the move, on the grounds that it attempting to "protect the substantial economic interests of New Zealand".
Communications advisor Angus Barclay told Reddell that Wheeler had to be able to make decisions as the Reserve Bank required.
"The governor has a statutory position as the sole decision-maker on the OCR. While the governor chooses to take advice from the monetary policy committee (MPC) and others prior to making decisions, the advice does not bind or compel the governor to any particular decision," Barclay wrote.
"MPC policy recommendations are simply advice that the governor is free to accept or not. What matters under the law is the governor's decision."
Wheeler's position in New Zealand's financial system is unusually powerful. He cannot be over ruled when he decides whether to change the effective cost of borrowing in New Zealand.
He is also in charge of decisions relating to financial stability, giving him significant power to regulate New Zealand's banks.
Other jurisdictions typically release the minutes of meetings of the committees which make interest rate decisions, often days after the decision is made. The minutes are used by the market as a guide of what the central bank may do in future meetings.
Wheeler has come under heavy criticism for his decision to increase the OCR from 2.5 per cent to 3.5 per cent during 2014, only to reverse all of the increases in 2015, then cut the OCR again in early 2016 as inflation dropped to almost zero.
Reddell said it was "simply preposterous" to claim that releasing the vote numbers of historic interest rate decisions could harm New Zealand's economic interests.
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