Adrian Orr, Governor of the Reserve Bank of New Zealand (RBNZ), has unexpectedly resigned, leaving the financial community in surprise. Orr, who was three years into his second five-year term, announced his departure in a brief statement on Wednesday in Wellington. Deputy Governor Christian Hawkesby will assume the role of Acting Governor until March 31, when Orr will officially step down.
Following the announcement, New Zealand’s dollar briefly dipped but recovered to remain largely unchanged, trading at 56.50 US cents at 3 p.m. in Wellington.
“I don’t expect any significant market impact,” said Stuart Ritson, a fixed-income strategist at Bank of New Zealand. “RBNZ operates with a committee structure for monetary policy, and Acting Governor Hawkesby will ensure continuity.”
Orr’s tenure as Governor had been marked by controversy, particularly regarding his aggressive interest rate hikes following the pandemic to combat inflation. These actions contributed to a recession, and the government has also pressured the RBNZ to reduce spending as part of negotiations for a new five-year funding agreement.
In his resignation statement, Orr expressed pride in his leadership, stating, “I leave the role with consumer price inflation at target, and the economy in a cyclical recovery following the COVID disruptions. The financial system remains sound.” However, he acknowledged there is still significant work to be done on ongoing long-term strategies, emphasizing the importance of continued focus and funding for their success.
Finance Minister Nicola Willis confirmed that, following a recommendation from the RBNZ Board, a temporary Governor will be appointed on April 1 for up to six months. She refrained from commenting on the reasons behind Orr’s resignation, noting that it was up to him to clarify.
Economist James McIntyre of Bloomberg Economics commented that despite the unexpected leadership change, the RBNZ’s challenges remain unchanged. “After forcing the economy into recession to curb inflation, the central bank now faces the task of securing a recovery,” he said.
With inflation now at 2.2%, near the middle of the RBNZ’s target range of 1-3%, the central bank has begun easing its policy, reducing the Official Cash Rate from 5.5% to 3.75%, with further cuts expected.
New Zealand’s economy, having endured a severe recession last year, is showing early signs of recovery.
Orr’s resignation comes just one day before the RBNZ hosts a two-day conference marking 35 years of inflation targeting — a policy approach the RBNZ pioneered in the early 1990s and which has since been adopted by most Western central banks. The conference will feature notable speakers, including former U.S. Federal Reserve Chair Ben Bernanke and current Bank of England Monetary Policy Committee member Catherine Mann.
Appointed by the Labour-led government of Jacinda Ardern in 2018, Orr, 62, had a distinguished career, including roles as New Zealand’s chief economist at Westpac Banking Corp and CEO of the New Zealand Superannuation Fund. His tenure, however, was marked by strained relations with Finance Minister Nicola Willis, as well as occasional conflicts with journalists and commentators.
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