Here’s Why The RBNZ’s Policy Committee Has Never Needed to Vote

The Reserve Bank of New Zealand’s Monetary Policy Committee has never needed to vote on a decision in its two years of operation because of a unique process that is conducive to consensus, according to external member Peter Harris.

The committee, which first met in May 2019, was created to bring a greater diversity of views to the decision-making process, but it considers a vote to be “the last resort,” Harris said in an interview Wednesday in Wellington.

“The committee has developed a process that increases the chances of consensus emerging, and increases the chances of early divergences of opinion being reconciled,” he said. “So far it’s moved to decisions that everyone can live with. I wouldn’t say 100% agreement on every dimension, every sentence of every statement, but broadly speaking we develop what is an effective consensus. I don’t think that would happen without the time and the staging of the deliberative process.”

The committee comprises four internal and three external members plus a Treasury Department observer. Ahead of each quarterly monetary policy statement it meets over 10 days in a structured way to first evaluate information and data from officials and then deliberate.

Key to the start of the deliberation phase is each member anonymously submitting their responses to a series of questions about the various options and their associated risks. That allows the committee to identify where disagreements lie and what risk elements most need to be addressed, said Harris.

He said unlike other central bank committees, the MPC doesn’t contain members representing a particular sector or require them to draw up an opening position they are then forced to defend. It also allows ample time for the process to run its course, rather than trying to reach a decision in too short a time span, he said.

While a vote at some point in the future cannot be ruled out, in two years the committee has not really come close to needing one, Harris said.

The MPC Charter allows for a vote when consensus cannot be reached, with a simple majority required. Harris said he would be opposed to a manufactured split aimed at sending a signal to the market.

“I would be quite hostile to the fact that it was being used deliberately as a tactic because that would be manipulative,” he said. “If we were playing games with the markets by orchestrating a split that would be lacking in integrity.”

Harris was speaking in the first interview to be given by an external member of the MPC. Asked why it had taken two years for an interview to be granted, Harris said too many voices speaking for the committee could undermine its integrity.

©2021 Bloomberg L.P.

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