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Now change the Reserve Bank Act

Now change the Reserve Bank Act

Calls to change the Reserve Bank Act to make it more pro-growth are being renewed by Progressive MP Jim Anderton.

He is challenging political fans of the Act to come clean on whether they still favour higher interest rates at the expense of growth.

"If you support today's interest rate cut, you cannot consistently also be a supporter of the Reserve Bank Act. The Act says inflation is the top priority for New Zealand. Today's cut, coming at a time of relatively higher inflation, shows some other priorities should get a look in too," Jim Anderton says.

"Until today, supporters of the Reserve Bank Act have always said higher inflation was worse than higher interest rates. Business groups would sneer that 'you can't inflate your way to growth.' Those slogans are today looking very sick.

"Today the Bank had to make its highest priority saving our economy from the effects of the global crunch. That shows there sometimes need to be other priorities than low inflation that monetary policy can help with.

"The rate cut today will help keep jobs in the economy and help keep New Zealanders' incomes up.

"Since the Reserve Bank Act was passed in 1989, we have always had higher interest rates and lower growth than we should have had because low inflation has been the only priority of the Bank in the Act.

"Widening the Reserve Bank's policy goals will help to strengthen the New Zealand economy," Jim Anderton said.


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