WELLINGTON, April 22 (Reuters) - New Zealand Finance Minister Bill English said on Friday a letter he sent to the central bank's board requesting detailed feedback was not driven by any concerns about the bank's performance in how it manages monetary policy and promotes financial stability.
English wrote a letter to the board in November, which he made public on Friday, outlining his expectations with respect to the board's activities.
Earlier in the week media reports indicated the government was stepping up its oversight of the central bank as it struggles to bring inflation back into the target range.
On Friday, however, English said ministers "typically" send letters of expectation to boards of entities in their portfolios and the aim was to bring it into line with other government agencies.
"This change reflects the Government’s focus on good public sector practice and has not been driven by any concerns with the Reserve Bank’s performance," English said.
Under New Zealand legislation the central bank and the government negotiate a public contract called the Policy Targets Agreement.
The current PTA stipulates that the bank must keep inflation within a 1 percent to 3 percent target range over the medium term, with a focus on the mid-point. Annual inflation is currently running at 0.4 percent.
In a speech in February, however, English noted that central banks around the world are grappling with very low inflation but said "New Zealand is in a better position than most because the Reserve Bank still has room to move if needed."
The central bank cut rates four times last year and once this year in a bid to stoke weakening inflation. After it cut the rate by 25 basis points to a record low 2.25 percent in March, it indicated at least one more cut was likely.
The next rate decision is due next Thursday and the market is currently pricing in a 31 percent chance of another 25 basis point cut at that meeting.
Governor Graeme Wheeler is the sole decision maker and responsible for ensuring the bank's actions are consistent with the PTA. The role of the board is to review the bank's performance.
Among other things, English asked the board for a "clear sense of its judgments" in assessing performance. He noted the board is responsible for reviewing the performance of the governor and said "I would expect to discuss your assessment of the governor's performance from time to time."
He also called for "greater visibility" of the board's activities and asked for six-monthly meetings.
