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Constructive RBNZ, media relationship not worth the risk and cost of lock-ups

Wednesday 3rd August 2016

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The Reserve Bank will end lock-ups for journalists and market analysts permanently after deciding the costs to police embargoes and the risk of another breach outweighed the benefits of having a positive relationship with the media or allowing more informed analysis and commentary.

From Aug. 11, full monetary policy statements will be released at 9am followed by a briefing for media at 10am, while financial stability reports will be released at 9am and a briefing held at 11am to allow reporters more time to read the larger document, governor Graeme Wheeler said in an emailed statement. The Reserve Bank canned lock-ups after a MediaWorks reporter breached the embargo earlier this year. The bank hired Deloitte to undertake a security review after news organisations sought to restore them. 

The Deloitte review weighed up three options: not resuming lockups; allowing pen and paper only; or introducing an RBNZ controlled environment with secure lockers to hold communication devices, CCTV and additional security guards. Deloitte ruled out the pen and paper option because it would unfairly advantage broadcast reporters because print and web reporters would have to re-type their notes. It estimated the cost of setting up a controlled environment would be at least $70,000 of capital and $25,000 annually. 

"Broadly speaking, based on our analysis, discussions with RBNZ personnel and research, the intuitive answer would indicate that you not reinstate the lock-ups process," the Deloitte review said. "This is because much of the perceived benefit of having the lock-ups process is intangible albeit, potentially important: a more constructive and positive relationship with the media, the opportunity to provide for more informed analysis and commentary on economic policy and changes." 

Deloitte said the RBNZ should only resume lock-ups if it believes those benefits outweigh the costs, accepting the residual risks, and be willing to regularly review those risks. 

The accounting and consultancy firm said the media landscape was changing, leading to a "less specialised, technically capable journalism approach" and that technology had become indispensable in allowing reporters to meet "the media goal to publish as quickly as possible".  

Wheeler said the review found there was "no completely failsafe option" and that any attempts to mitigate that risk would be eroded by advances in technology. 

"We gave serious consideration to the value of the lock-ups and the potential issues that could arise if we permanently discontinued them," he said. "We also consulted with many other central banks. New Zealand was one of only a few central banks that held pre-release lock-ups of OCR (official cash rate) decisions for news media." 

The Reserve Bank's communication policy was criticised earlier this year when Wheeler said he wouldn't take an overly mechanistic approach to monetary policy in a public speech, only to cut rates at the next meeting, surprising many in the market. The central bank went on to claim financial market analysts misinterpreted what it was saying by latching on to parts of a speech that weren't directed at them, but by then it was too close to a rate review to alter that perception.

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