Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Reserve Bank Missed Opportunities For Lower Interest Rates

Reserve Bank Missed Opportunities For Lower Interest Rates

New information released by the Green Party today shows that the Reserve Bank has been over-estimating the rate of inflation meaning interest rates have been kept higher than necessary.

Reserve Bank board papers released to the Green Party under the Official Information Act show that since 2011, the Reserve Bank has consistently assumed inflation would remain around the mid-point of its target band yet actual inflation has been lower meaning the Bank had additional scope to cut the Official Cash Rate (OCR).

“Poor forecasting by the Reserve Bank has meant interest rates have been kept higher over the last year than they needed to be,” said Green Party Co-leader Dr Russel Norman.

“Higher interest rates have slowed our economic recovery and kept our dollar higher, hindering economic rebalancing towards exports and import substitution.

“The Bank’s singular focus on managing inflation comes with a heavy opportunity cost for the rest of the New Zealand economy – less jobs and more debt.”

The Reserve Bank paper highlighted the fact that the New Zealand dollar was overvalued and needed to come down to ‘stabilise our foreign debt position’.

“By keeping the OCR higher than it needed to be to manage actual inflation, the Reserve Bank Governor has kept the dollar higher hurting exporters and export-led growth,” Dr Norman said.

“This again highlights the problem of leaving the OCR decision to one person only – the Reserve Bank Governor,” said Dr Norman.

“No other country in the OECD leaves such an important decision to one person.

“Treasury agree and have recommended a review of the single decision-maker feature, a review the Minister of Finance has refused without reason.

“Having the Reserve Bank Board setting the OCR leads to better more balanced decision making, as the interests of the wider New Zealand economy will be better represented around the table.”

Dr Norman commended the Reserve Bank for implementing new measures to improve their inflation forecasting going forward.

Reserve Bank graph comparing actual inflation against forecast:

Link to Reserve Bank board paper on bank inflation forecasting:
https://www.greens.org.nz/sites/default/files/reserve_bank_board_paper_on_inflation_forecasting.pdf  

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Gordon Campbell: On What John Key Should Be Asking Joe Biden

No doubt, US Vice-President Joe Biden will be updating Prime Minister John Key on the chances of a TPP vote taking place in the ‘ lame duck’ session of Congress that’s held between the November’s election and the inauguration of a new President in January. More>>

ALSO:

Make NZ Make Again: Greens Will Establish A Minister For Manufacturing

The Green Party announced today that it will establish a Minister for Manufacturing in Cabinet, to better represent the interests of manufacturers and ensure they thrive. The Minister will be inside Cabinet and have responsibility for the long-term interests of the manufacturing sector. More>>

ALSO:

Cannabis Party: Treasury Figures On Cost Of Criminalisation

Figures released by Treasury prove the economic viability of The Cannabis Party's policy, while destroying the credibility of police claims about cannabis harms. More>>

ALSO:

Green Party: Investigation Into Mental Health Facilities Shows Disarray

The Health Minister must urgently launch an inquiry into mental health services, after serious issues with the standard of care at mental health and disability facilities around the country were revealed today, the Green Party said. More>>

ALSO:

Apparently He Means 'Years 0-8': Seymour Announces 4th Partnership Schools Application Round

“The continuing growth of this policy reflects the achievement of the eight existing Partnership Schools, and the strong levels of interest educators and community leaders are showing in the Partnership Schools model and what it offers students and their families,” Mr Seymour says. More>>

ALSO:

Trust Directors: Urban Māori Win Case Against Te Ohu Kai Moana

The National Urban Māori Authority (NUMA) and Te Waipareira Trust have succeeded in their claim over a $20 million trust set up for the benefit of urban Māori, meaning all directors of the trust must represent Māori who are not affiliated with an iwi. More>>

New Model: Carbon Tax Could Lower Emissions And Boost Economy

A carbon tax targeting emissions-intensive industries, along with a revamped Emissions Trading Scheme (ETS), could boost economic growth, with the extra tax generated used to cut GST from 15 percent to 12.5 percent. More>>

ALSO:

Budget Docs Release: ACC Sought $158mn In Budget 2016, Got $26.4mn

The Accident Compensation Commission requested an extra $158 million in funding for 2016/17 from the government ahead of Budget 2016, but Treasury instead recommended an interim payment of just $26.4 million be funded to tackle demographic changes, papers published by the government show. More>>

ALSO:

Submissions Sought: Māori Party Joins Opposition Housing Inquiry

People who are homeless, those who were once homeless, those working with the homeless and concerned New Zealanders are being asked to share their experiences and solutions to this growing issue with the Cross-Party Homelessness Inquiry. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news