Bank economists

After attacked bank as talking up their own banks’ interests, the SST has looked at whether it is true. Extracts:

“It’s absolute bollocks,” says Westpac chief economist Brendan O’Donovan. If bank economists were seen to be always trying to talk their business up “and not talking the reality of the situation, then our credibility’s out the door and no one will listen to anything we say”. …

BNZ chief economist says some of the policies he publicly espouses are not in the bank’s interests. He advocates a fixed interest rate levy, which increases whenever the Reserve Bank puts up interest rates. This effectively removes fixed interest rates. …

ANZ chief economist says the material produced by the bank’s economists “is not the bank’s thinking. No, it comes out of the economics team led by myself but it’s not reviewed by a higher order of the bank”.

The team had to give its customers honest forecasts. Sometimes the bank management had “grimaced” at some of his statements. …

The bank economists’ case gets support from a perhaps unexpected corner Council of Trade Unions (CTU) economist . …

One reason the bank economists got a lot of media attention, Conway says, was that they were “very good”. They had a lot of resources and could quickly produce well-informed commentaries on a variety of subjects.

Bank economists clearly have some constraints on their freedom to speak, but so do other economists. Conway can’t publicly criticise the economic position of the CTU. Reporters, says Conway, need to “shop around” and get the views of economists from a variety of backgrounds.

In other words Dr Cullen was shooting the messengers.

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