A major reduction to the Central Bank's planned spending

The Government and the Reserve Bank have agreed to reduce operating expenses by a quarter, in the coming year.

They've signed a five-year funding agreement, allowing 750 million dollars of operating expenses, well below the one billion the Bank was asking for.

Finance Minister Nicola Willis says all government entities need to identify cost savings - and find value for money.

Reserve Bank Chair, Neil Quigley, says they'll need to look closely at all spending, including staffing costs.