The Reserve Bank of New Zealand (RBNZ) just released its Annual Report for 2024, providing an opportunity to examine how the central bank views its own performance. 

The Governor’s statement is revealing, praising a “Great team, best central bank” while ignoring the serious macroeconomic mismanagement by the current leadership. 

The Governor discusses challenging domestic and international environments, citing geopolitical and climate risks. He notes that central banks globally are maintaining restrictive policies to meet inflation targets. However, there is not even a hint that the RBNZ’s own decisions contributed to these circumstances. 

While the report does not mention the word ‘recession’ at all, it deals extensively with policy areas that are not the RBNZ’s core responsibility. 

The report glosses over the RBNZ’s significant growth since 2017. Staff numbers, which hovered around 200-250 from 2000 to 2017, have since ballooned to 601. In the past year alone, 91 employees were added—an 18% increase. This expansion occurred while other government departments were asked to curb growth. 

The bank’s structure has become top-heavy. In 2000, there were only two Deputy Governors and no Assistant Governors. By 2024, the structure includes one Deputy Governor and eight Assistant Governors. The RBNZ managed the Global Financial Crisis with far fewer senior positions. 

Salary expenditure have also risen dramatically. In 2017, 132 employees earned over $100,000. By 2024, this figure had more than tripled to 436. A significant portion of the increased budget has reportedly gone towards expanding communications operations, now operating on a budget comparable to that of the entire bank in the early 2000s. 

This growth has not translated into improved performance. Between 2021 and 2024, the RBNZ missed its inflation target by a wide margin. So much so that it then had to push the economy into recession to bring inflation under control again.  

Additionally, taxpayers are now bearing the cost of the Large Scale Asset Purchase programme, with losses amounting to about 11 billion dollars—nearly four Dunedin hospitals worth. 

The Government and Finance Minister must tackle these organisational failures and excesses. The RBNZ must be steered back towards its core functions, so it can again be one of the world’s best small central banks. 

New Zealand needs a central bank dedicated to its mandate, accountable, and effective in its operations. The current RBNZ, according to its Annual Report, falls short on all these counts.