Members of the public are due to get greater insight into the thinking of those on the powerful Reserve Bank committee that sets interest rates. 

The Monetary Policy Committee (MPC) and Finance Minister Nicola Willis have agreed to a new charter that will see members’ individual views on how to set monetary policy publicised. 

So, members’ views on how the Official Cash Rate (OCR) should be set will be disclosed in meeting minutes, as will their rationales – even if they all share the same view. 

Currently, the committee discloses if its members vote differently on how to set the OCR. But it doesn’t say who voted for what. 

When Reserve Bank Governor Anna Breman, who chairs the committee, started her role in December, she said she wanted more transparency around committee members’ thinking. 

“Monetary policy transparency is important as it ensures that central banks remain accountable to the public and credible in their decisions,” she said. 

The new charter also eases restrictions that made it difficult for committee members to share their views with the public. 

But it still requires any information shared to be accessible by all members of the public. It is important everyone gets the same market-sensitive information. 

Willis said the changes would “strengthen transparency, support accountability and help build public understanding of the MPC’s decision-making”. 

The six-member committee (consisting of three Reserve Bank staff and three external members) will operate under the new charter when it next reviews the OCR on May 27. 

External member and Professor of Macroeconomics at the University of Auckland, Prasanna Gai, will also deliver a lecture at a Treasury event on Monday under the new charter. 

His lecture will be on how disruptions to key supply chain hubs, like energy and shipping routes, can turn into broad inflation risks. 

Central banks in other parts of the world disclose individual members’ views. 

The Reserve Bank of New Zealand only started putting decision-making around monetary policy in the hands of a committee, rather than just the governor, in 2018. 

The thinking was always that the exact shape and form of the committee would evolve with time. 

Before his departure, former Reserve Bank Governor Christian Hawkesby told the Herald he had hesitations about publicising individual committee members’ views. 

He said there was a risk this could see them approach meetings with firm views in defence of their publicly held positions, rather than be open-minded and collaborative. 

However, as committee members’ views have diverged more over the past year, and the committee’s takes on inflation have flip-flopped on occasion, market participants have commented they would have a clearer idea of how to anticipate future OCR moves if they better understood members’ thinking. 

Breman said she was also enhancing transparency by doing press conferences more frequently. 

The committee is now speaking to media every time it reviews the OCR, rather than only quarterly, when reviews are accompanied by the publication of quarterly Monetary Policy Statements that include economic forecasts. 

Jenée Tibshraeny is the Herald‘s Wellington business editor, based in the Parliamentary Press Gallery. She specialises in government and Reserve Bank policymaking, economics and banking.