Major changes for Reserve Bank?

Finance Minister Steven Joyce

Finance Minister Steven Joyce has announced that Treasury has appointed former State Services Commissioner Iain Rennie to review two aspects of Reserve Bank governance.

First, the review will look into the Reserve Bank’s process for making OCR decisions.

Currently, the Reserve Bank follows a voluntary committee process when deciding whether to raise or cut the OCR but, under the legislation, the Reserve Bank Governor actually has sole power to make those calls.

This is unusual compared to most central banks and critics point out that it puts a lot of power in the hands of an unelected official.