Adrian Orr: Navigating monetary policy through the unknown

Speech by Mr Adrian Orr, Governor of the Reserve Bank of New Zealand, at the Peterson Institute, Washington DC, 23 October 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

It is a privilege to be invited to speak here at the prestigious Peterson Institute. I have travelled from afar – the nation of New Zealand or Aotearoa. The latter is the name settled on by the descendants of the courageous Polynesian navigators who were the first explorers to arrive sometime between 1200 and 1300AD. These people are now known as New Zealand Māori.

Our ancestors travelled long distances across the South Pacific Ocean to make Aotearoa their home. People tell the story of Kupe, the Polynesian navigator who centuries ago set out from an island by the name of Hawaiki on a voyage and discovered Aotearoa.

From the outset of this voyage, his starting point would have been approximate, the destination was well beyond the horizon, and the expected time of arrival unknown. During the voyage the performance of the vessels would be sorely tested and the information to navigate on continuously changing. The challenges of the voyage were unknowable. They had to sail smart. It can only be assumed there was a strong collective belief in the existence of the destination among the crew and passengers, and equal faith in their navigator.

The premise of the navigator's challenge resonates with the everyday challenges that leaders confront, and it is pertinent to guiding monetary policy through recent times of both calm – the great moderation – and storm – the recent years of COVID-19 induced radical uncertainty.