Reserve Bank board chair says governor Adrian Orr made a ‘personal decision’ to resign

Wednesday, 5 March 2025

Reserve Bank board chair Neil Quigley has declined to shed any more light on the reason for Reserve Bank governor Adrian Orr’s shock resignation, other than to say it was personal.

Orr announced Tuesday afternoon that he will leave the bank at the end of the month. An acting governor was appointed at midday.

His resignation came hours before he was due to welcome central bankers at an international conference in Wellington.

The prime minister and finance minister earlier today said it wasn’t for them to say why Orr had resigned.

Quigley, who gave a brief media conference, walked off stage and refused to answer further questions after less than 15 minutes.

Quigley: Orr faced ‘unrelenting critique’

Quigley says Orr “made a personal decision” to resign “and he feels it's the right time for him to make that decision”.

Asked about potential issues between the bank and the Government over funding, Quigley said it was working through some views about the funding of the bank.

However those issues that were being worked through were not behind his resignation, Quigley said.

“We are, you know, as I say, working through with the Government some policy issues, some funding issues, that’s the normal course of the relationship between the bank and the minister.”

Said Quigley: 'You have to remember that the job of the Reserve Bank governor is one where you face unrelenting critique of your actions, you know, no matter what you do.

“There is a time when you think having achieved what you wanted to achieve, that's enough.”

Asked if he was satisfied with the way the resignation was handled, Quigley said he did not consider it 'unusual' as it followed the process laid out in law. He agreed the resignation was not an “every day occurrence”.

“It’s not a question of whether it’s satisfactory to me.”

Unexpected resignation announced shortly before 2pm

While Orr remains at the bank until the end of the month, deputy governor Christian Hawkesby has been appointed acting governor effective immediately, until March 31.

Prime Minister Christopher Luxon said he learnt of Orr’s resignation today. Finance Minister Nicola Willis said she had been aware for the last few days that “conversations have been occurring between [Orr] and the board.”

She agreed she expected the board to front on the resignation and said questions about the resignation were for the bank: 'This is the choice of Adrian Orr.'

The bank released a statement in which Orr said it had been a privilege to lead the institution, but which gave no explanation for his sudden departure.

“I leave the role with consumer price inflation at target, and an economy in a cyclical recovery following the long period of Covid-related disruption.

“The financial system remains sound. However, there is much work left to do on the major multi-year strategies the Reserve Bank is following,” he said.

Willis issued a brief statement wishing Orr well for the future.

Orr had an at times testy relationship with Willis while she was in Opposition, with the pair frequently clashing in select committees over monetary policy.

But Willis had expressed satisfaction with recent interest-rate cuts announced by the bank.

Shortly before entering the House for Question Time, Willis said, “He has resigned, and questions about the nature of that resignation are for the Reserve Bank board.

“The resignation has occurred. The Reserve Bank board have accepted it. I have acknowledged the governor's seven years of service in the role, and I wish him well for the future.”

Reason for resignation unclear

Asked whether Orr had resigned due to disagreement with the Government or its policies, Willis said she had not been informed of this.

'I have been aware for the past few days that conversations were occurring. I am confident that the Reserve Bank as a strong financial institution, that Christian Hawkesby is experienced.

Hawkesby had been deputy governor since 2022, and been with the bank since 2019.

“I'm sure that over the next few days, people will have all sorts of things to say about Adrian Orr's tenure at the Reserve Bank. I've made my comments on the performance of the Reserve Bank quite clear as Opposition finance spokesperson, and I don't intend to say any more today.”

Put to her that the resignation was extraordinary, Willis responded: “I wouldn't characterise this as extraordinary.”

Luxon said the reason for Orr’s departure was “an issue for him”.

PM: ‘You’ll have to ask him’

“There will be lots of different commentary. It's not for me to climb in,” he said.

“Let's be clear, the Reserve Bank governor and the Reserve Bank of New Zealand is an independent role and an independent organisation. The Reserve Bank governor has resigned.”

Luxon said his engagements with Orr had been very constructive.

'I've played our role, which is to make sure that we're working with fiscal policy, making sure we're getting rid of all the wasteful spending, the contractors, the consultants, to lower inflation, to lower interest rates, so we get the economy working.'

Associate Finance Minister David Seymour said “ultimately, this is a guy who had a really important job to do. He's now moved on. And I think what's really important is that we get a really good person in the position.'

One of Orr's major but more controversial initiatives outside of the day-to-day setting of monetary policy has been to boost the amount of capital that banks need to hold to protect themselves against the risk of failure.

The Reserve Bank's role promoting competition in the banking industry and economic growth have been a source of ongoing discussions between the bank and the Government.

Reserve Bank chief economist Paul Conway recently brushed off concerns from the Government and the Opposition that its own rules around the weightings given to business and mortgage lending in its capital rules might be unnecessarily impeding business investment and economic growth.

Orr had been due to deliver a welcome and opening remarks at a rare international conference of central bankers that the Reserve Bank will be hosting in Wellington starting tomorrow, but a bank spokesperson said that Hawkesby would now be attending in his place.

‘Orr neither hawk, nor dove, but an activist’

BNZ research head Stephen Toplis said there was lots of chatter about why Orr might have chosen to resign, but nothing of substance.

'We all know that there have been disagreements between Adrian and the Government for a reasonably sustained period of time.

'But why their parting has come at this time, goodness only knows.'

His departure would only influence monetary policy at the margins, but was unlikely to result in interest-rate cuts being any more aggressive, he said.

'People have always asked us if he is a 'hawk' or a 'dove', we've always said, neither, he is an 'activist'. I think history shows that once Adrian makes up his mind about where we need to get to, he gets there fast, so the current period of aggressive rate cuts will have been supported by Adrian.'

Toplis noted there had been 'some disagreement between the Government and the central bank about the capital requirements for the banking sector' and he didn't know whether those rules might now change.

'But were that to happen, it would be an easing of capital requirements, not a strengthening of capital requirements. Obviously, that would provide some stimulus to the economy that might, at the margin, necessitate less work be done by interest rates.'

ANZ Bank chief economist Sharon Zollner said the consequences of Orr's resignation on the near-term outlook for monetary policy would be 'extremely limited'.

Many economists expect the Reserve Bank to further cut the official cash rate by 25 basis points to 3.5% when it next meets, without Orr, to review the rate on April 8.

'The decisions are made by a committee, and the vast majority of the committee is still there,' Zollner said.

'Obviously, we'll all have to wait and see who the new governor is and what their priorities are.'