Adrian Orr’s stiff upper lip

Reserve Bank Governor Adrian Orr has advised businesses to focus on things they can influence and banks to consider their ‘‘social licence’’ and play a long game to bridge the gap in activity created by coronavirus outbreak.

‘‘That is all it is, just a gap,’’ he said.

Building on comments during a speech on Tuesday that ‘‘confidence and cash-flow’’ would see New Zealand through the economic fall-out, Orr told Stuff that it was ‘‘not a deep insight’’ that fear of failure could create failure in industries such as the finance sector.

‘‘That is why we want people to think smart about it. Banks earn their social licence to operate during these types of times.’’

Businesses should ‘‘talk to their bank, think about cash-flow, talk to suppliers, talk to end customers, just over-communicate

‘‘Banks earn their social licence to operate during these types of times.’’

Adrian Orr

Reserve Bank Governor

and keep calm and have sensible conversations’’, he said.

The Reserve Bank has not yet followed the trend among central banks by lowering its official cash rate in response to the growing economic impact of the contagion.

But it is almost universally tipped to cut the OCR at its next scheduled review on March 25, perhaps to just 0.5 per cent.

Orr did not believe there was a perception that the bank had been slow to respond to date.

Instead, there were benefits in the central bank getting more information about how consumer and investor behaviour was unfolding and the response of global governments, he said.

‘‘While some talk about ‘what is your interest rate response?’, at times like this central banks have a much broader and important role which is around financialmarket functioning and financial institution stability.’’

Retail banks had been telling him the impact they had been seeing from the coronavirus was ‘‘narrow and sector-specific’’.

ANZ chief economist Sharon Zollner said on Monday that the coronavirus had rapidly created a ‘‘global financial shock’’, but Orr said he not believe there was a problem in the finance sector.

‘‘Given that we ‘bank the banks’ we will have really good real-time insight into what they are experiencing.

‘‘We will have less real-time insight into how they are behaving, and that is the important part – to stay with them on that; that they are behaving for the longterm well-being.’’