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Deflation shows need to reform Reserve Bank mandate
Friday, 18 January 2013, 12:24 pm
Press Release: New Zealand Labour Party
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David
PARKER
Spokesperson for Finance
18 January 2013
MEDIA STATEMENT
Deflation shows need to reform
Reserve Bank’s tunnel vision mandate
Prices
dropped in the last three months of the year while the
housing market took off and the dollar remained stubbornly
high, showing the need for monetary policy reform, says
Labour’s Finance spokesperson David Parker.
“Deflation in the last quarter shows inflation is no
longer the main problem. The high exchange rate that is
crippling exporters and costing jobs is.
“Meanwhile the
housing market is taking off again, meaning the Reserve Bank
is likely to keep interest rates high compared to other
countries, which keeps the dollar high.
“Our monetary
policy has passed its use-by date. The Reserve Bank has a
tunnel vision mandate that requires it to primarily consider
the prospect of increasing inflation. This pushes other big
issues - our overvalued and damaging exchange rate – down
the priority queue
“This is despite unemployment at
13-year highs, a stagnating economy and a $10 billion
external deficit, which is worse than every developed
country bar Greece.
“National’s economy isn’t
working for ordinary New Zealanders. Manufacturing outside
primary industries is in trouble and jobs are being cut
every week. It’s the high dollar that’s causing this,
not inflation. We need to remove the tunnel vision mandate
and give the Reserve Bank a 20/20 perspective for the
economy.
“Labour has long argued that the Reserve Bank
must be able to look beyond inflation and give equal weight
to other important issues such as the exchange rate and
jobs. That would help our exporters and manufacturers and
allow them to create good jobs that pay a decent wage,”
says David
Parker.
ENDS
© Scoop Media

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