Adrian Orr’s exit omnishambles from the Reserve Bank

Thursday, 6 March 2025

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ANALYSIS: The sudden and basically unexplained resignation of Adrian Orr as Reserve Bank governor was a shock ‒ and one extremely rare among the ranks of global central banks.

But it was a shock without any of the mercurial Orr, the governor having already effectively left the central bank he has led for the past seven years without so much as a farewell, leaving bank chair Neil Quigley to pick up the pieces and try to explain why.

Significant questions still hang over the manner in which Orr has left.

At 1.37pm an email landed saying that the governor, who had presided over both record low interest rates and the biggest inflation spike in three decades, had resigned. Nine minutes later Finance Minister Nicola Willis appeared on the way to the House looking stony faced, assuring the public that the bank continued to run stable and predictable monetary policy but that she expected the Reserve Bank board to front on why Orr had suddenly departed.

At 4.30pm, the Reserve Bank advised quickly it would do a brief press conference. Quigley gamefully appeared, looking every bit the economics professor that he is and simply said the resignation was personal.

Quigley ‒ who has gone through a lot with Orr ‒ seemed basically lost for words, leading to the obvious, but not proven, conclusion that there had been some hefty disagreement or that Orr ‒ who is used to getting his way and known to have a short fuse ‒ had packed a sad and decided he wanted to leave immediately, refusing to front up to explain why. After all, he was supposed to speak at a big global central banking conference hosted by the RBNZ on Thursday. Late Wednesday his name was still on the programme.

In fact, Quigley said that Orr’s no show was “a matter for for Adrian”.

“He's decided that he's on leave, and he's comfortable with that decision and with me being here to talk to you,” Quigley said.

When asked if, as chair, he was satisfied with how Orr’s sudden departure had played out he said, “it's not a question of whether it's satisfactory to me. It is just what's happened.”

Well, that’s that then. Evidently, $804,000 per year doesn’t buy taxpayers an explanation.

Quigley’s press conference just made matters worse. He left after 10 minutes, leaving more questions than answers.

The Post asked Willis if she was was satisfied with the chair’s explanation of why Orr departed and if she had confidence in the chair of the board. The finance minister, through a spokesman, replied with two words: “Yes” to both.

It is extremely rare ‒ globally ‒ for central bank governors to resign mid-term and almost unheard of for them to pull the pin, effective immediately. The way it played out was an embarrassment for the bank and everyone else involved. The fact that Willis played such a straight bat on it all showed she realised how it looked and didn’t want even a whiff of Government involvement.

Yet there was clearly no love lost between Willis and Orr. Two minutes after the news of Orr’s shock resignation landed in in-boxes around the country, Willis put out a press release at 1.39pm with a one-line quote on the governor, “acknowledging” his resignation.

“I wish him well for the future,” it said.

No thanks, no ‘good job’, just a description of the fact he was standing down.

National was never happy at how he was reappointed within a year of an election, and after years of being criticised for failing to keep inflation down, Orr wasn’t above public barbs about the PM and Nicola Willis taking credit for interest rates falling, saying that success had many fathers.

One of the key lines in Orr’s resignation was that, “there is much work left to do on the major multi-year strategies RBNZ is following. Ongoing focus and funding will be critical to these projects’ success.”

Funding and focus.

There have been plenty of nods to the likelihood of the bank getting a funding hair cut at the May Budget after years of growth in headcount and budget. In 2024 the bank’s total operating expenses were $180 million, up from $76m in 2018. Staff expenses have nearly tripled, from $32m in 2018 to $94m in 2024.

The bank has a completely new corporate structure for that money but, as with every other department, the Government is looking closely at what voters got for that extra cash. Key players within Government think the answer to that is little at best, and a distracted bank at worst.

The other issue swirling around is the Government’s view on the Reserve Bank’s increased capital requirements, which was a policy child of Adrian Orr and his pursuit to make the banking sector more resilient.

The Finance and Economics Select Committee appeared to spend a fair bit of its efforts in its review into bank competitiveness on the Reserve Bank’s pursuit of this policy. The Commerce Commission in its market study into retail banking competition also made the same point.

It could well be that Orr simply wasn’t prepared to see something he had worked hard on, and steadfastly defended, dismantled or unwound in some ways.

And all of that it is without even making any assessment of Orr’s performance as governor.

Either way, this was an omnishambles. Few doubt that Deputy Governor Christian Hawkesby will ably act until a permanent replacement is appointed, or that monetary policy will change much ‒ after all it is decided by committee now.

Overall, the manner in which Orr has exited leaves covers no one in glory and simply leave many unanswered questions.

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