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RBNZ accidentally disclosed decision ahead of monetary policy announcement

WELLINGTON (Reuters) - The Reserve Bank of New Zealand (RBNZ) said on Wednesday it had accidentally disclosed information about its monetary policy announcement last week to a group of financial services firms before it was made public.

A security guard stands in the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. Picture taken July 3, 2017. REUTERS/David Gray/File Photo

RBNZ introduced a new funding-for-lending programme (FLP) on Nov. 11 that would reduce costs for lenders, while holding its benchmark interest rate at record lows.

In a letter sent to non-bank financial institutions the central bank disclosed its decision to introduce FLP about 45 minutes before it was publicly announced at 2 p.m. (0100 GMT), RBNZ said in a statement.

The letter, however, did not contain specifics of the FLP, it added.

“The limited information contained in the letter is unlikely to have provided anyone with a market advantage, but the Reserve Bank is taking the matter seriously,” RBNZ said.

The bank’s new programme and its commitment to hold interest rates steady until March had sent the New Zealand dollar to the highest since March 2019 that day.

Market participants said there was already very strong expectation that FLP would feature in RBNZ’s announcement so the accident had no impact.

“If it had concerned a change in the cash rate, which was not expected, it would be concerning as selective disclosure would create winners and losers in the market,” said Andrew Ticehurst, Rate Strategist at Nomura Australia Ltd.

“This early release of information was not ideal and was clearly an error. But it did no damage in the market on the day, and RBNZ has recognised this was an error and I’m sure its reviewing its processes.”

The central bank said it has engaged Deloitte to independently review internal processes and will comment further on any outcomes when the review is complete.

Reporting by Praveen Menon; Editing by Jacqueline Wong and Kim Coghill