By Alasdair Pal
(Reuters) – Adrian Orr, who unexpectedly resigned as New Zealand’s central bank governor on Wednesday, had a reputation as a maverick policymaker unafraid to surprise financial markets, and who clashed repeatedly with current Finance Minister Nicola Willis.
Supporters praised Orr’s decisive action in easing monetary policy during the COVID-19 pandemic, as well as modernising the RBNZ’s operations during his seven-year tenure.
His detractors said Orr cut rates too fast, stoking inflation, then went too far the other way after the pandemic, sharply hiking rates and causing a recession.
Orr offered no reason for his resignation, which leaves the bank without a permanent head at a time when the country is suffering its worst economic downturn in three decades.
Neil Quigley, chair of the Reserve Bank of New Zealand’s board, told a press conference that Orr felt he had achieved his objectives, and it made little sense to remain in a job that faces “unrelenting critique”.
The RBNZ and government are currently in negotiations over the bank’s long-term financing plan, with Willis last week raising the possibility of slashing its funding as part of broader government spending cuts.
Quigley declined to answer questions on whether the funding review or clashes with the government were the cause of Orr’s resignation.
LARGER THAN LIFE
Orr, the son of a builder, took the helm of the bank in March 2018, after a decade running New Zealand’s high-performing sovereign wealth fund.
Those who have worked with Orr have described him as a “colourful” and “larger-than-life” character with a reputation for pragmatism and speaking his mind.
He soon gained a reputation for wrong-footing traders, holding rates despite wide expectations of a cut in February 2019, before reversing course and signalling a cut the next month despite solid economic data.
A major test came during the COVID pandemic, where he cut rates by 75 basis points to 0.25% in March 2020, as well as beginning asset purchases and introducing a lending program for banks in a bid to shore up the economy.
Orr, who has Maori ancestry, has put the Indigenous heritage and language at the centre of the bank’s operations, in opposition to the current government that wants to reduce the use of Maori language and concepts in official business.
RBNZ policy documents are now dotted with visual and linguistic references to Maori folklore and the use of common Maori phrases or words has at times perplexed foreign investors trading the New Zealand dollar.
Orr also led a move to a more consensus form of policymaking, with monetary policy statements now published by a committee rather than the governor.
CONTINUED CLASHES
Orr has long been criticised by the ruling centre-right National Party, in particular Willis, who became finance minister when the party won power in 2023.
When Orr was reappointed for a second five-year term in November 2022 by the centre-left Labour Party, Willis, then the opposition finance spokesperson, said the decision was “a serious mistake”, calling for an independent inquiry into the bank’s monetary policy response during COVID.
Orr’s appearances before lawmakers during this period were tense affairs, with Orr frequently taking issue with Willis’ line of questioning.
“Can you understand how some at this juncture might expect some humility from you?” Willis asked Orr at one hearing in 2022, criticising the bank’s response to the pandemic.
“I strongly disagree with your statement and I look forward to tabling our review of policy where it actually has facts and situations in real time,” Orr replied.
“We can talk about the last five years till the cows come home… but it will be fact-based, not assertion.”
On Wednesday, Willis released a terse statement after Orr’s resignation.
“I wish him well for the future,” she said.
(Reporting by Alasdair Pal and Charlotte Greenfield; Editing by Lincoln Feast.)
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