Central bank communications with the media: becoming a prisoner of their own device..

Came across this really interesting press release from Reserve Bank of New Zealand.

They used to have this media and financial analyst briefing just before the policy outcome release. Guess what it is called – Pre-announcement embargoed lock-ups!! Phew..

As one would expect, there was a leak in March policy leading to stoppage of the practice. The central bank then reviewed the process and decided to stick to its stand of no such meeting:

The Reserve Bank today announced new procedures for the release of its quarterly Monetary Policy Statements, interim Official Cash Rate Reviews, and six-monthly Financial Stability Reports.

From and including the 11 August MPS release, the Bank will:

  • Release MPSs at 9:00am on the day of release, via its pages on Bloomberg and Thomson Reuters terminals, the Bank’s website, Twitter, and email to news media and general public subscribers.  This procedure will be the same for the release of OCR Reviews.
  • For MPSs, the Bank will also invite media to a press conference with the Governors to be held at 10:00am on the same day.

Release procedures for the FSR will be the same as for MPSs, except that the press conference will be held at 11:00am, so that journalists have more time to read the larger document. 

The decision on new procedures follows a halt to pre-announcement embargoed lock-ups for news media and financial market analysts after the March OCR decision was leaked from a media lock-up.

Governor Graeme Wheeler said that, following requests by news media representatives to restore the lock-ups under different security arrangements, the Bank commissioned a security review by Deloitte. “On the basis of the security review, the Bank has decided not to resume pre-release lock-ups for news media and financial market analysts.“The review found that in the rapidly changing technology environment there is no completely failsafe option, and that over time the extent of risk mitigation through controls will be eroded by advances in technology. 

See how Bloomberg and Reuters are mentioned so explicitly and right at the beginning. Do check the Deloitte document. It is quite interesting and ironic to see the detailed thinking on this matter. Looks like some military operation of sorts.

Central banks have long enjoyed their prestige catering to the media and analysts. The media and analysts now have careers as central bank watchers. There is a conference called ECB watchers! I don’t know which cenral bank started this practice of monetary policy meeting with the media. But am sure they will be surprised to see the clamor and hype around it. It was just an interest rate decision after all.

One always wonders about utility of this obsession but yes it is really a well-paid job. So things just continue. In may ways it is like this priest following. Before the priest comes and gives sermons, the watchers write and express their views on TV on what is likely to happen. If priest does as per expectations, pat comes the comment “told you so”.Otherwise it is just “did not go as per expectations”. And then further discussion happens trying to demystify the whole message. Then comes the date for the next such sermon and again the same things goes on.

In all this people have no clue what is going on. The watchers have made us believe this is the most important activity of the day. Suddenly this news starts popping – Xyz central bank raised interest rates and all discussion moves there. People are just not sure what is going on. But with this continuous pounding, people are made to believe something really important is happening.

Within all this commotion, there is always this clamour for being invited to such lock-ups/post policy discussions. It is a case of egos after all. People are not just interested in whether they are invited but also who all are invited. The addition and deletion of names conveys rise and fall off the ladder.  Post invitations, the next bit is to somehow become a favorites of the central banking team. One should always try and ask a smart question and hope the central banking team says good question before answering the same. It adds to the whole prestige of the questioner and is given preference over others in next set of meetings.

With RBNZ stopping lockups, the media watchers are bound to be disappointed as one avenue to showcase prestige closes. The RBNZ team also loses out as they too relish such closed door interactions given the power to dictate terms behind doors. These closed door discussions are later discussed amidst friends and colleagues adding to rise in reputation at both ends. There are often questions like – What was the body language? Did it indicate more action next time as well? And so on..

But then they still have the post policy discussions. Try and manage with whatever is remaining..

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