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BNZ boss urged to rein in top economist

NZN 9/06/2017 Paul McBeth

Reserve Bank governor Graeme Wheeler called on Bank of New Zealand chief executive Anthony Healy to rein in his top economist after taking umbrage at the language used in the lender's preview of the latest monetary policy statement last month.

Mr Wheeler, who is to step down as governor on September 26, wrote to Mr Healy on May 11, the day the MPS was released, saying a preview written by BNZ head of research Stephen Toplis called into question the Reserve Bank's integrity.

It said it would be "negligent" not to admit it had a tightening bias, expressed "through an explicit expression of rate increase(s) in its published OCR track".

Mr Wheeler's letter, and a reply from Mr Healy, were released under the Official Information Act.

Mr Wheeler's letter describes a back story, suggesting he reached out to Mr Healy after failing to bring Mr Toplis to heel.

It says Mr Wheeler's deputy governors had individually approached someone (the name is redacted) "to convey their concern at the personal nature of the criticism being expressed by the BNZ in its written publications".

"When this failed to address the situation I met with you and passed on examples of the material," Mr Wheeler wrote. "I mentioned that the BNZ approach was damaging to the Reserve Bank and the New Zealand financial market, and the personal nature of its tone was contrary to that of other banks."

In the event, the Reserve Bank statement last month was, as economists at ANZ put it, "aggressively neutral".

Mr Healy's May 16 reply says BNZ "will be reviewing the contents of the BNZ Markets Outlook and the concerns expressed in your letter in detail".

"Once that process is complete, I would appreciate the opportunity to have a call with you to discuss the outcomes of that review," Mr Healy wrote.

The BNZ's economics team, led by head of research Mr Toplis, hasn't pulled its punches in its assessment of the Reserve Bank and its management and communication of policy.

Mr Wheeler took exception to wording in the MPS preview last month that "implies that the Reserve Bank would not exercise reasonable care in the discharge of its responsibilities".

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