Anderton supports clarification of RBNZ PTA
26 June 2002 Media Statement
Anderton supports clarification of Policy Targets Agreement
Development Minister Jim Anderton supports the call for
clarification of the meaning of the existing PTA, which
requires that the Reserve Bank maintain:
…”a stable general level of prices, so that monetary policy can make its maximum contribution to sustainable economic growth, employment and development opportunities within the New Zealand economy.”
Mr Anderton would go further in suggesting that if an agreed interpretation of “maximum contribution” is not shared, the new PTA should more explicitly put the emphasis on development.
“The Reserve Bank has increased interest rates by 0.75 per cent over the last six months, apparently on the grounds that the economy is growing beyond the Bank’s theoretical limits. The lags involved in monetary policy are long and variable, so to be on the safe side the RBNZ always tries to get its retaliation in first.
“My view is that growth is not something to be stamped out like a noxious weed.
“High interest rates are anti-growth and anti-jobs. It is hard to justify why New Zealand should have the highest real interest rates (the difference between the market rate and the rate of inflation) in the OECD.
“The ‘cure’ of excessively targeting inflation at the cost of jobs, growth and overseas debt is worse than the disease.
“Under the Clark/Anderton Government, interest and exchange rates have been low. These factors, together with proactive development policies, have seen the economy performing well. Unemployment is significantly down and for the first time in most people’s memory, every single region is in positive growth - many at over 4%.
“The new Policy Targets Agreement needs to lock in the success of the present direction, instead of going back to failed policies,” Jim Anderton said.