Reserve Bank admits breaking own embargo on Funding for Lending scheme

Wednesday, 18 November 2020

The Reserve Bank has admitted breaking its own embargo on the centrepiece of its monetary policy statement last week.

The central bank said it had accidentally disclosed its decision to press ahead with a Funding for Lending scheme that will see it print money to lend to banks in a bid to further lower retail interest rates.

The Reserve Bank said in a statement on Wednesday that it had mistakenly sent a letter to non-bank financial institutions revealing the decision 45 minutes ahead of its announcement.

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It said the letter did not contain specifics of the scheme, which will see the central bank print up to $28 billion to lend to banks at the official cash rate with few strings attached.

“The limited information contained in the letter is unlikely to have provided anyone with a market advantage,” it said.

But it said it was taking the breach seriously and had engaged consultant Deloitte to “independently review” its internal processes.

The Reserve Bank ceased holding “lock-ups” to provide the media with advance information on its monetary policy decisions in 2016 after media company MediaWorks admitted one of its staff passed information to a colleague outside of the lock-up, in breach of the bank’s rules.

The information on the Funding for Lending scheme was disclosed ahead of time in a letter signed by deputy governor Geoff Bascand that sought to respond to concerns among non-bank lenders that they might be disadvantaged, relative to the banks, by not qualifiying for the cheap funding line.