OCR decision was leaked, Reserve Bank confirms

by NZ Adviser14 Apr 2016
An independent investigation has confirmed that highly sensitive and valuable market information on the March Official Cash Rate (OCR) cut decision was leaked by a journalist ahead of the official release, the Reserve Bank said today.

Following the investigation, the Bank will tighten its procedures for the release of confidential information.  The Bank will discontinue embargoed lock-ups for news media and analysts ahead of announcements of interest rate decisions, Monetary Policy Statements and Financial Stability Reports.

The investigation by Deloitte’s forensic unit found that, contrary to the rules of the lock-up, information on the Bank’s decision to cut the OCR was transmitted by a Newshub Mediaworks reporter to several people in the Newshub office from the media lockup for the Monetary Policy Statement on 10 March.    

This information was then passed on by another person in Newshub Mediaworks, well before the MPS official release, to an economics blogger.  The blogger only alerted the Bank to the leak after the MPS was officially released.

Deloitte was assisted in its investigation by Mediaworks’ legal team, who undertook an internal investigation, uncovered emails that confirmed the leak, and reported these to Deloitte.

Governor Graeme Wheeler said: “The leak is a serious and disappointing breach of many years of trust.  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 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.”

No evidence has emerged that the leak gave rise to any financial market impact.

The Bank has considered alternative arrangements relating to information security.  However, none completely mitigated the technology and human risks, said Head of Communications Mike Hannah. 

“We have reviewed the procedures of several central banks. None provide lock-ups for analysts prior to major policy announcements, and the few that provide embargoed lock-ups for media representatives take extensive measures to control the media environment in the lock-up that are not viable for us. Most central banks do not provide embargoed lock-ups.” 

Mr Hannah said that from the 28 April OCR statement release, the Bank will issue OCR and MPS statements via its pages on Thomson Reuters and Bloomberg screens at 9:00am, as is currently the case, followed by release on its website and to email subscribers.  In the case of the quarterly MPSs and six-monthly FSRs, the release of a news release and these documents at 9:00am will be followed an hour later by a press conference.

“The decision not to provide lock-ups for media or analysts means that these parties will receive the information at the same time as other financial market and public audiences.”
 

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