Uncloaking central bank monetary policy language with an illustration of a hot air balloon?
In his maiden press conference as the new governor of the Reserve Bank of New Zealand (RBNZ), Adrian Orr took a distinctly different approach to elucidating policy from the likes of former U.S. Federal Reserve Chairman Alan Greenspan.
After surprising markets by striking a dovish tone, the New Zealand central bank chief used his first rate announcement to provide a monetary policy statement “in pictures,” a world away from the play book of Greenspan who once reportedly told a member of Congress that “if you understood what I said, I must have misspoken.”
The colorful illustrations – including a hot air balloon tagged “inflation” lifting a crate of “imports” – were the most tangible sign yet of Orr’s push to demystify the central bank’s operations for the general public.
“I think our challenge is to speak in plain English as opposed to in a high tech scientific language around which only about half a dozen people understand and even less are interested in,” Orr told reporters at a press conference after he held rates at a record low 1.75 percent “We do need to have a richer dialog.”
Orr opened his first webcast press conference with a welcome in English, Māori and sign language and was at points knowingly self-deprecating, joking when he turned to one of his deputy governors to check a statistic that he “struggles to divide three by two.”
Orr, a central bank veteran, worked in the RBNZ’s economics department between 1997 and 2000, described by economists as the ‘heyday’ of strict inflation targeting which New Zealand pioneered in the 1990s. He later served as deputy governor for four years before joining the New Zealand Super Fund in 2007.
Orr has engaged in a local media blitz since becoming governor in March, giving interviews to several regional publications, following a RBNZ-commissioned survey that found the vast majority of the general public had no idea who he or the central bank was.
“That’s a good thing on a Saturday at the football ground,” referring to the public’s lack of awareness of his and the bank’s role. But Orr said, it’s “not necessarily a good thing if we’re trying to raise financial literacy and make people think harder about all the things that are important to us.”
He describes himself as CEO, rather than a governor, a role that he sees as encompassing everything from regulation to responsibility for bank notes as well as monetary policy.
While economists say there’s probably more change in style than substance, Orr’s fresher, open tone is grabbing headlines and more public engagement is likely.
“That’s another area we hope to upgrade, the quality of our pictures,” he told reporters.
“These were one of the only things we could get immediately out of one of our kids’ icons actually.“