New Reserve Bank Governor Anna Breman Addresses Market Conditions

New Reserve Bank Governor Anna Breman has signaled her commitment to transparency by issuing a statement on financial conditions, just a day after her appointment. In an interview with Corin Dann, the incoming RNZ business editor, Breman discussed her interpretation of current economic conditions and their implications for monetary policy.

Breman took the unusual step of addressing the markets directly, stating that financial market conditions have tightened since the RBNZ’s last decision in November 2023. She remarked that these conditions have exceeded what was anticipated in the central bank’s projections for the Official Cash Rate (OCR), which was reduced to 2.25 percent late last month.

“Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR,” Breman noted. Despite this tightening, she emphasized that there remains a possibility of another rate cut, depending on upcoming economic data. She indicated that the next monetary policy meeting in February would be crucial, as the RBNZ anticipates receiving important GDP and inflation figures in January.

Breman, who previously served as the First Deputy Governor of Sveriges Riksbank, underscored the importance of clear communication. “I am rather new in my role—still just about two weeks into it—and I thought it was reasonable for markets to see how I read the economic data,” she explained. She acknowledged the divergence between the Reserve Bank’s projections and market reactions but refrained from labeling the market’s views as right or wrong.

When discussing the economic landscape of New Zealand post-Covid-19, Breman highlighted the country’s struggle with weak growth and a fragile labor market in recent years. She expressed optimism about the recovery, stating, “I think that what we’re seeing now is that New Zealand has had several years with weak growth, a weak labor market, and we’re starting to see the economy recovering.” She reiterated the necessity for sustained growth while keeping inflation low and stable.

In addition to monetary policy, Breman addressed the importance of cash access in modern society. Research from the Reserve Bank indicates that 80 percent of adults use cash at times, with over half (56 percent) storing cash and 8 percent relying on it for transactions. “It is very important that people still have access to cash, and it is part of our job to ensure that,” she stated, emphasizing the need for both financial inclusion and crisis preparedness.

Breman’s tenure as Governor began on December 1, 2023, and she is already making a mark with her proactive communication style. As the RBNZ navigates an evolving economic landscape, her statements reflect a commitment to keeping markets and the public informed.

For those interested in further insights from Breman, the full interview will be available on RNZ’s website on Wednesday morning.