Reserve Bank governor’s unique power over interest rates to come under review

  • The Reserve Bank governor’s power over interest rate decisions will be reviewed, after years of denials by the National government that this issue needed to be considered.

Former State Services Commissioner Iain Rennie has been appointed by Treasury to investigate both the Reserve Bank’s process for determining movements in the official cash rate (OCR), and whether the bank should be in charge of the legislation it operates under.

The review was requested by Finance Minister Steven Joyce.

It comes at a time of growing political pressure to change the Reserve Bank structure, with Opposition finance spokesman Grant Robertson due to give a speech on the central bank’s model on Monday.

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While he opts to make interest rate decisions by committee, Reserve Bank Governor Graeme Wheeler, like his predecessors, is ultimately the only one who makes the decision.