Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Monetary Policy Needs Mates

27 October 2005

Monetary Policy Needs Mates

“The Reserve Bank’s task of containing inflation is being made more difficult by other government policies”, Roger Kerr, executive director of the New Zealand Business Roundtable, said today. He was commenting on the increase in the Official Cash Rate to 7.0 percent.

Mr Kerr said that the process of reducing inflation in the 1990s was helped by such factors as stronger fiscal discipline, deregulation to make markets more competitive, corporatisation and privatisation that increased efficiency, a freer labour market that limited across-the-board wage increases, and tax reductions.

Inflation – an ongoing increase in the general level of prices – is a monetary issue, but the accumulated effects of other government policies are putting pressure on costs and prices and exacerbating the imbalances that concern the Bank.

Key drivers include:

- very high rates of increase in government spending;

- cost-increasing employment law changes, such as holidays legislation (and the proposed increases in the minimum wage will add to wage pressures);

- the expanded role for local government, which is generating high rate increases;

- poor infrastructure policies;

- the Resource Management Act and urban intensification policies that are putting pressure on house prices; and

- the rising tide of business regulation.

“To help the Reserve Bank in curbing inflation, other policies should be made more consistent with a firm monetary policy”, Mr Kerr said.

“Priorities include reductions in baseline government spending to offset new commitments, reductions in taxation (and the abandonment of the carbon tax), constraints on local government, and a broad review of business regulation similar to that being undertaken by the Australian government.

“The Reserve Bank is doing too much of the heavy lifting and the unbalanced policy regime is threatening economic growth. The Bank’s criticism of household spending, borrowing and lending is misplaced – it should not be blaming the private sector. Rather, while operating a non-inflationary monetary policy, it should be calling for government action to support its role”, Mr Kerr concluded.

ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

I Sing The Highway Electric: Charge Net NZ To Connect New Zealand

BMW is turning Middle Earth electric after today announcing a substantial contribution to the charging network Charge Net NZ. This landmark partnership will enable Kiwis to drive their electric vehicles (EVs) right across New Zealand through the installation of a fast charging highway stretching from Kaitaia to Invercargill. More>>

ALSO:

Watch This Space: Mahia Rocket Lab Launch Site Officially Opened

Economic Development Minster Steven Joyce today opened New Zealand’s first orbital launch site, Rocket Lab Launch Complex 1, on the Mahia Peninsula on the North Island’s east coast. More>>

Earlier:

Marketing Rocks!
Ig Nobel Award Winners Assess The Personality Of Rocks

A Massey University marketing lecturer has received the 2016 Ig Nobel Prize for economics for a research project that asked university students to describe the “brand personalities” of three rocks. More>>

ALSO:

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts, Including Xtra: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

ALSO:

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news