Summarised by Centrist
Prime Minister Christopher Luxon has revealed he gives his personal “reckons and perspective” to Reserve Bank Governor Christian Hawkesby before official interest rate decisions are made.
The admission has raised eyebrows over the Reserve Bank’s operational independence.
Speaking to Mike Hosking, Luxon confirmed he meets Hawkesby prior to Official Cash Rate (OCR) announcements and tells him the economy needs more stimulus. “Yup,” Luxon replied when asked if he tells Hawkesby what he thinks. “That’s me giving my reckons and perspective.”
Luxon insisted he respects the Bank’s independence and does not direct the Governor to act. “I can give my views but I respect the independence of the Reserve Bank, Mike, under legislation,” he said.
But Labour’s finance spokeswoman Barbara Edmonds called the comments inappropriate, saying Luxon was “walking a very fine line between his reckons being directions.” She said it risked undermining confidence in the Bank’s independence, already in the spotlight after Adrian Orr’s resignation and ongoing tensions over regulatory reform.
Two members of the Monetary Policy Committee recently voted for a 50 basis point cut, while the majority opted for 25. Luxon appeared to side with the dovish view. “Personally, I do,” he said, when asked if he agreed the Bank should have eased policy faster.
Economists generally view central bank independence as essential for market trust and long-term stability.
