Adrian Orr, the Governor of the Reserve Bank of New Zealand (RBNZ), resigned suddenly on Wednesday, ending his seven-year term three years early.
No specific reason was provided for his departure, which will take effect on March 31.
Orr’s resignation follows increasing criticism from the National Party-led government, particularly over the high interest rates that contributed to the country’s worst recession since 1991. In a statement, Orr said he was leaving with consumer price inflation at target and the economy in a cyclical recovery after the disruption caused by the COVID-19 pandemic.
Finance Minister Nicola Willis confirmed that discussions had been ongoing between Orr and the RBNZ Board regarding his possible resignation, but she refrained from characterizing the reasons behind the decision. Deputy Governor Christian Hawkesby will act as the Governor until a permanent replacement is appointed by March 31.
The decision to step down comes amid an international conference hosted by the RBNZ, celebrating its 35 years of inflation targeting as part of its monetary policy. RBNZ Board Chair Neil Quigley acknowledged the pressures faced by central bank governors, who often deal with intense scrutiny, particularly during periods of economic challenges.
Despite the criticisms, Orr had previously helped lead a significant stimulus program to address the economic damage from the pandemic.
The National Party, led by Prime Minister Christopher Luxon, had voiced dissatisfaction with Orr’s leadership, particularly after inflation surged and the RBNZ raised interest rates to curb it. The RBNZ’s aggressive monetary tightening ultimately pushed rates to 5.5%, contributing to the recession.
The sudden resignation raises further questions about the future direction of New Zealand’s monetary policy, particularly given the RBNZ’s central role in navigating post-pandemic economic recovery.
Finance Minister Willis assured that the RBNZ remains a strong financial institution and that the board would continue to operate with stability during this transition. Prime Minister Luxon, while acknowledging the resignation, emphasized the Reserve Bank’s independence and refrained from offering further commentary.
