Adrian Orr: Promoting economic wellbeing - Te Pūtea Matua optimisation challenges

Keynote speech by Mr Adrian Orr, Governor of the Reserve Bank of New Zealand, at the 2023 New Zealand Economics Forum, Waikato University, Hamilton, 3 March 2023. 

Central bank speech  | 
08 March 2023

Introduction

Tēnā koutou, tēnā koutou, tēnā koutou katoa.

Thank you for inviting me today – it's great to be back again at this forum.
First, I would like to acknowledge the extreme hardship that many people in Aotearoa are experiencing at present as a result of the recent extreme weather events.

Today I've been asked to talk about how our work at the Reserve Bank of New Zealand – Te Pūtea Matua can best contribute to the economic wellbeing and prosperity of the people of Aotearoa New Zealand.

That is our legislative purpose – our reason for being.
In doing so, I will outline our navigation lights – our legislation and policy remits, how these commitments shape our work, and how we manage the policy trade-offs we inevitably face from time to time.

There are three main strands to the work of Te Pūtea Matua.

The first strand is our monetary policy work. Through our role as the supplier of a fiat currency – the New Zealand dollar – we aim to keep consumer price inflation low and stable through time.

Our desire is to maintain the purchasing power of our currency through time, by moderating economic demand to broadly match the supply capacity of the New Zealand economy. In doing so we meet the necessary criteria of a trusted currency – it is seen as a unit of account, a means of exchange, and a store of value.
We aim to slow (or accelerate) domestic spending and investment if it is outpacing (or falling behind) the supply capacity of the economy. We do this by influencing people's incentives to spend or save by altering the level of short-term interest rates.