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Treasury Secretary to sit in on RBNZ monetary policy reviews

Tuesday 16th October 2018

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Treasury secretary Gabriel Makhlouf will sit in on the Reserve Bank's monetary policy reviews from this month, pre-empting a legislative change. 

The central bank extended the invitation in July for a Treasury observer, and Makhlouf formally accepted on Oct. 3. His acceptance included a confidentiality protocol on how a Treasury official would go about sharing information not officially communicated and deemed to be inside information.

The interim Treasury observer arrangements effectively introduce an aspect of looming legislative changes to formalise a decision-making committee on monetary policy with external members. Former governor Graeme Wheeler introduced an informal committee made up of his deputies during his five-year tenure. 

The Reserve Bank of New Zealand (Monetary Policy) Amendment Bill is currently before Parliament's finance and expenditure committee, which is due to report back by Dec. 3. 

The government decided to introduce a Treasury observer to the meetings to improve the information flow between the Reserve Bank and Treasury and the linkages between fiscal and monetary policy. 

National finance spokeswoman Amy Adams outlined her concerns about the Treasury observer during the bill's first reading. She said there would need to be a high degree of probity and transparency around the arrangements to make sure committee members weren't accused of political interference. 

(BusinessDesk)

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