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RBNZ says journalist leaked surprise rate-cut move in March

Thursday, April 14, 2016 - 12:08

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New Zealand's central bank said a journalist leaked its decision to cut interest rates last month before the official release time, although there is no evidence the information had any impact on financial markets.

[WELLINGTON] New Zealand's central bank said a journalist leaked its decision to cut interest rates last month before the official release time, although there is no evidence the information had any impact on financial markets.

A Newshub MediaWorks reporter sent information about the surprise cut to the official cash rate from a media lockup on March 10 before an embargo was lifted, the Reserve Bank of New Zealand said in a statement Thursday, citing the results of an independent investigation by Deloitte. This information was then passed on by another person in Newshub to an economics blogger, it said.

"The leak is a serious and disappointing breach of many years of trust," Governor Graeme Wheeler said in the statement. "It created the opportunity for improper gain on financial markets and damage to the integrity of the bank's communications. I am extremely disappointed that the information was leaked initially and then communicated more widely."

The RBNZ initiated a probe after Michael Reddell, a former RBNZ official and now outspoken critic of the central bank, wrote in a blog post that he'd been told of the decision before the embargo lifted. 

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The RBNZ on March 10 cut its benchmark rate to a fresh record low of 2.25 per cent, wrong-footing most economists and investors and prompting the New Zealand dollar to drop more than 1 US cent.

The central bank holds lockups for journalists and analysts on the day of a rate decision so they can digest the news under an embargo, which lifts at 9 am local time.

The RBNZ said Thursday it would discontinue lockups for rate decisions, monetary policy statements and financial stability reports with immediate effect.

In his Croaking Cassandra blog, Mr Reddell said he "had an email out of the blue" at around 8 am on March 10 that disclosed the rate decision. He informed the bank after 9 am, he said.

"The fact that several people outside the bank, who had access to the information improperly, failed to alert the bank immediately, was irresponsible and left open a significant risk that the bank could have closed down quickly with an immediate official release," Mr Wheeler said.

The RBNZ engaged Deloitte's forensic unit, which interviewed members of the media that had attended the lockup, including Bloomberg News reporters.

"Deloitte was assisted in its investigation by MediaWorks' legal team, who undertook an internal investigation, uncovered e-mails that confirmed the leak, and reported these to Deloitte," the RBNZ said.

Mark Weldon, chief executive officer of MediaWorks, said the company had apologized unreservedly for the incident, according to a statement on its Newshub website.

"Once MediaWorks was aware a leak had taken place, it conducted its own investigation to determine whether the leak had come from within MediaWorks and self-reported that to the Reserve Bank," Mr Weldon said.

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