Finance Minister Bill English has publicly released a letter of expectations he sent to the Reserve Bank board and is seeking to play down suggestions he has been concerned about the central bank's performance.
The release of the letter by English followed publicity about it after documents released under the Official Information Act to Bloomberg and then more widely showed Treasury recommending English send the board a formal statement of expectations in a letter, including around the areas of whether the Governor Graeme Wheeler's performance on monetary policy was meeting the Policy Targets Agreement.
The actual letter to RBNZ chairman Rod Carr on November 23 last year is similar to the draft versions that were released earlier. And it does include a paragraph outlining how the duties of the RBNZ board include keeping under review the performance of the Governor, as well as another paragraph saying that "greater visibility of the board's activities throughout the year" would be welcome "and I would be interested in any suggestions you have to facilitate that". The letter also spoke of establishing six-monthly meetings between the chairman and English.
"In advance of those meetings, I invite you to share any other documents regarding the bank's performance which would support the discussion," English said in the letter.
In a statement accompanying release of the letter, English said it had been prepared "after The Treasury identified an opportunity to bring the accountability framework into line with other Crown agencies".
“This change reflects the Government’s focus on good public sector practice and has not been driven by any concerns with the Reserve Bank’s performance,” English said.
Ministers "typically send letters of expectation to the Boards of entities in their portfolio", he said.
Letters of expectation from the Minister to the boards of State Owned Enterprises are a regular occurrence, but the Reserve Bank's special status as a statutorily independent body with a special Policy Targets Agreement between the Minister and a single decision maker in the Governor has meant there has previously been no such letter. The letters to other SOEs often include detail about expected dividends and can be quite prescriptive.
English has commented with various degrees of frustration over the last year about inflation being below the 2% midpoint in the PTA for more than four years, which has coincided with the Reserve Bank's short-lived hike in interest rates in 2014 and the currency's stubborn strength despite slumping dairy prices.
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