RBNZ governor unexpectedly resigns

Adrian Orr has unexpectedly resigned as governor of the Reserve Bank of New Zealand (RBNZ).

Orr, who had been governor since 2018, did not give a reason for his resignation earlier today (March 5). He began his second term in 2023 and was due to step down in 2028.

Orr has been placed on leave until his term officially ends on March 31. Deputy governor Christian Hawkesby will serve as acting governor during this period. He also takes over from Orr as chair of the monetary policy committee.

From April 1, the finance minister will appoint a temporary governor for a period of up to six months on recommendation from the RBNZ board.

“Over the last seven years we’ve significantly built our capability and capacity so we can respond to an [increasingly] complex and challenging global environment,” Orr said in a statement released by the RBNZ. In the same statement, Neil Quigley, who chairs the RBNZ board, praised the former governor’s efforts in leading the bank.

Orr’s announcement came as the RBNZ prepared to host a two-day research conference on flexible inflation targeting. In a press conference hours after Orr’s resignation, Quigley said Orr would no longer be attending the event, which begins tomorrow.

Quigley added that he had been discussing the resignation with Orr in recent days and that it had been a “personal” decision for the governor. He added that Orr felt it was the “right time” to leave.

“The job of the reserve bank governor is one where you face unrelenting critique of your actions,” Quigley told reporters. “And so, you know, there is a time when you think, having achieved what you wanted to achieve, that that’s enough.”

Quigley added that he maintained a “very good” relationship with Orr, who did not appear at the press conference.

Nicola Willis, the finance minister, said she was aware that “discussions had been occurring” for the past few days between Orr and the RBNZ board but did not provide a reason for his resignation.

“Questions about the nature of the resignation are for the reserve bank board,” Willis told reporters in parliament shortly after the news broke. She added that she had not asked Orr to leave.

Speaking to reporters alongside Willis, the prime minister, Christopher Luxon, said he only found out about the resignation today and would not be commenting further.

Eventful tenure

When Willis’s National Party was still in opposition, it repeatedly called for an independent review of the RBNZ’s performance. As shadow finance spokesperson, Willis argued that the bank’s stimulus programmes during the pandemic had contributed to rising house prices and high inflation. She had also described Orr’s re-appointment in 2022 as a “serious mistake” as the decision had been made without going through an independent review.

After the National Party won the October 2023 election, it immediately removed the RBNZ’s dual mandate and returned to a single goal of price stability. The RBNZ’s mandate had previously also included maximum employment – a measure introduced by the Labour Party in 2018.

The return to a single mandate was welcomed by the Orr-led RBNZ, which had advised the government in April 2023 that placing a greater emphasis on price stability would be “beneficial” on balance.

In addition to governance reforms, Orr’s tenure also saw the launch of a central bank digital currency, a breach in a data system provided by a third party, a greater use of the indigenous Māori language and, most recently, a dispute with a pro-business group over prudential policy.