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Speaker 1: You're listening to a podcast from newstalk zed be follow

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Speaker 1: this and our wide range of podcasts now on iHeartRadio.

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Speaker 2: Adrian or He is stepping down as Reserve Bank governor

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Speaker 2: at the end of this month. He made the announcement today,

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Speaker 2: four years before the end of his second five year term.

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Speaker 2: To discuss further, we're joined by Brad Olsen, CEO of

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Speaker 2: infor Metrics. Get a brand good afternoon.

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Speaker 3: Now, Brad, it has been said that the Reserve Bank

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Speaker 3: and Adrian who were created crisis by moving too slowly

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Speaker 3: and then had to engineer a recession to deal with

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Speaker 3: that mistake. Is that fair and if so, when did

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Speaker 3: the Reserve Bank start making mistakes?

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Speaker 4: Oh?

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Speaker 5: I think look, that have certainly been criticisms over time,

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Speaker 5: and hindsight is a little bit twenty twenty in terms

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Speaker 5: of moving too so on probably both the up and

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Speaker 5: the downside. I mean you look through parts of twenty

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Speaker 5: twenty one and inflation was clearly getting going much quicker

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Speaker 5: than the Reserve Bank at the time picked up on

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Speaker 5: we were looking at the numbers just for and inflation

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Speaker 5: over the governor's tenure has been above three percent, so

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Speaker 5: effectively outside of the band now yes, there's been a

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Speaker 5: lot of global factors in that as well, but certainly

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Speaker 5: a challenging time on the inflation front, and I don't

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Speaker 5: think that the reserve banks sort of ability to get

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Speaker 5: inflation under control, and certainly the confidence of the market

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Speaker 5: has been as under pressure as in recent years. But

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Speaker 5: in fairness, inflation is now back under control. So at

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Speaker 5: the very least, you know, the reserve banks inflation fighting

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Speaker 5: credentials are a bit more back than before. I mean,

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Speaker 5: look to be honest, though, guys, I mean that this

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Speaker 5: was still we're a bit stunned by how quickly this

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Speaker 5: has come about. I mean, it looks like the government

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Speaker 5: is effective immediately, almost not working, given that there'd be

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Speaker 5: no reason to point enacting governor until the end of

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Speaker 5: the month if he was going to keep going. So

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Speaker 5: this is super out of the blue.

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Speaker 2: And so do you think this is a political push

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Speaker 2: out the door or the governor himself made this decision?

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Speaker 2: How do you read that brand? It's a difficult one.

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Speaker 5: I know everything I've seen so far, and you know,

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Speaker 5: we're still trying to wrap half our heads around what's

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Speaker 5: going on.

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Speaker 4: It does seem to be much more driven.

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Speaker 5: I ad rendlaw personally, and that I think is the

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Speaker 5: way that it should be. Almost no matter what, the

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Speaker 5: government of the day can't shouldn't have any real influence

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Speaker 5: over that. And so the discussion looks like from the

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Speaker 5: public reporting that we've seen so far has been more

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Speaker 5: between the board and the outgoing governor. That's appropriate, I

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Speaker 5: guess sort of it would be an unusual time for

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Speaker 5: there to feel like there was any political pressure as well.

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Speaker 5: You know, interest rates are coming down if there was

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Speaker 5: going to be political pressure from you know, a new government,

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Speaker 5: and there shouldn't be, but if there was, it would

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Speaker 5: presumably be when the new government came in rather than

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Speaker 5: a year and bit after. So it's a little bit

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Speaker 5: hard to wrap your head around that place that I'm

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Speaker 5: sitting in at the moment.

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Speaker 3: When you talk about politics. Would it be safe to

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Speaker 3: say that Grant Robertson dunt Adrian Or on the new government.

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Speaker 3: And if that's the case, what did Grant Robertson think

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Speaker 3: that Adrian Or could do for the economy that a

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Speaker 3: replacement couldn't.

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Speaker 4: Look I think at the.

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Speaker 5: Time when the governor was reappointed, I think it was

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Speaker 5: sort of an unsavory period of politicking putting the Reserve

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Speaker 5: Bank and the governor themselves aside for a moment. You know,

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Speaker 5: the expectation is that there is you know, discussion and

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Speaker 5: sort of at least tacit agreement for a governor appointment,

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Speaker 5: and that's generally happened over time.

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Speaker 4: And I know that.

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Speaker 5: You know, when we last had Adrian or appointed for

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Speaker 5: his extended term, it wasn't disagreement from the then opposition.

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Speaker 5: That was nothing personal against him. There was just a

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Speaker 5: difference of view. And so the fact that that appointment

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Speaker 5: went through with political disagreement, I think that that hampered,

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Speaker 5: you know, the idea of political neutrality on the Reserve

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Speaker 5: Bank at the time. I don't think there's any caste

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Speaker 5: dispersions at the moment, but like I say, I mean,

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Speaker 5: I think it's unhelpful when politicians meddle, and at that point,

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Speaker 5: Robertson as Finance Minister had meddled.

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Speaker 2: In my view, he's had a lot of criticism over

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Speaker 2: his tenure. Bread does he deserve and the wider Reserve Bank,

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Speaker 2: do they deserve some sympathy with what they had to

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Speaker 2: deal with.

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Speaker 5: Oh, there's obviously been a lot of challenges that were

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Speaker 5: completely out of their control that they had to blind

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Speaker 5: react to. But in fairness, that's also the job that

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Speaker 5: we don't appoint the Reserve Bank, you know, governor and

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Speaker 5: the board to sort of just manage through business as usual.

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Speaker 5: That they have to be able to respond to whatever

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Speaker 5: gets thrown at them and to be fair, look again, things,

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Speaker 5: you know, criticisms have been around the Reserve Bank, sometimes

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Speaker 5: too slow. But today we have inflation that's at two

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Speaker 5: point two percent of the latest measured figure, almost as

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Speaker 5: close as you can get with a bit of normal

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Speaker 5: variation to the midpoint of that one point one to

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Speaker 5: three percent target. That there is a bankers taskworth So

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Speaker 5: at the moment, things are in a bit of spot.

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Speaker 4: Yes, there have been a lot of challenges.

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Speaker 5: You look the likes of the Russian invasion of Ukraine

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Speaker 5: which sent fuel prices going higher. You look at the

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Speaker 5: general supply shock from the pandemic. All of that was

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Speaker 5: very much there. But I think with again hindsight, you

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Speaker 5: look back at particularly twenty twenty one and go, well,

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Speaker 5: actually the economy was clearly starting to build up a

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Speaker 5: head of steam at that point. It wasn't as much

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Speaker 5: need to massively stimulate the economy. We kept doing so,

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Speaker 5: and that certainly contributed to where we got with inflation.

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Speaker 5: Not the only response, but it wasn't helpful either.

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Speaker 3: Yeah, and it does look like we had one of

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Speaker 3: the worst you know landings, as we've been saying in

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Speaker 3: the OECD. So you know, we didn't get everything right. Now,

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Speaker 3: there's a lot of texts coming through saying, you know,

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Speaker 3: blaming Adrian or for the quantity of easing of the

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Speaker 3: last government. But what role does the Reserve Bank have

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Speaker 3: in quantitive easing?

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Speaker 5: Well, I think that that's sort of the challenge. Yes,

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Speaker 5: the government had to borrow a lot, the Rezero Bank

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Speaker 5: didn't have to buy it all that. There is certainly

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Speaker 5: a need to keep the market functioning, and so the

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Speaker 5: Reserve Bank has in the past and certainly did during

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Speaker 5: COVID have to go in and buy some stuff and

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Speaker 5: sell some stuff to sort of keep the pipes moving.

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Speaker 5: When it came to you know, bond activity and all.

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Speaker 4: That sort of thing. That was definitely true.

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Speaker 5: But the Reserve Bank also, for the first time in

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Speaker 5: monetary policy history in New Zealand at least, took a

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Speaker 5: very definitive view that actually it was going to do

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Speaker 5: more of that with a deliberate view to using that

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Speaker 5: to influence monetary policy, to influence interest rates, to influence

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Speaker 5: you know, how easy or not the economy had a

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Speaker 5: pass in front of it. So that was a deliberate choice.

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Speaker 5: It happened certainly, very rapidly, and I don't know if

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Speaker 5: we've fully come to grips with how that changed the

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Speaker 5: game and what it would mean for the future. So

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Speaker 5: I do think again there's questions to be asked, but

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Speaker 5: to be fair, and I think probably the most important thing,

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Speaker 5: because we're talking about a person here at the end

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Speaker 5: of the day, adrian Or has always been willing to

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Speaker 5: front up.

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Speaker 4: There's been disagreements you know.

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Speaker 5: That have come through around monetary policy, stances and decisions,

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Speaker 5: but he's always been fronting up. He's always sort of

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Speaker 5: delivered his message. There might have been differences on what

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Speaker 5: that message conveyed, but he put it forward and he

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Speaker 5: put it forward strongly.

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Speaker 2: So all in all, Brad, what do you think adrien

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Speaker 2: Or's legacy will be as reserve being governor?

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Speaker 4: I think it's a bit too early to write that

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Speaker 4: one fully.

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Speaker 5: I mean, he's technically stilling the role, and.

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Speaker 4: You know, we always want to see a bit more data.

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Speaker 5: But like I say, inflation got out of control.

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Speaker 4: On his watch.

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Speaker 5: Wasn't fully his hopeful that at all, but he was

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Speaker 5: the person tasked who getting it back in order. There

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Speaker 5: have been some challenges along the way, I certainly think't

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Speaker 5: here were some missteps, if you know, from different people's view,

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Speaker 5: probably including mine. But at the very least he hasn't

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Speaker 5: tried to abandon ship midway through the processes actually got

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Speaker 5: inflation under control. Would have been very different tones I

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Speaker 5: think of thought coming from people if you had gone

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Speaker 5: when inflation must say seven percent. So at least he's

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Speaker 5: leaving with things in the white starting position.

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Speaker 2: Brad, always fantastic to get your analysis. Thank you very

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Speaker 2: much and we'll chat again soon. Brilliant that is Brad Olsen,

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Speaker 2: Infametrics chief, chief executive and principal economists.

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Speaker 1: For more from News Talks, a'd be listen live on

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Speaker 1: air or online and keep our shows with you wherever

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