Parliament

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 The Fallout From The Barclay Tape

This is hardly a case of cleaning out your desk and being turfed out onto the pavement.

As others have pointed out, the disgraced Clutha-Southland MP will remain on the public payroll for three months until the election, and for three months afterwards. More>>

 

Ombudsman: Canterbury Schools Reorganisation Mishandled

An investigation into the Canterbury schools reorganisation after the February 2011 earthquakes has found significant gaps and flaws in the Ministry’s engagement and communications with schools and communities. More>>

ALSO:

Law Commission: Contempt Report "Protects Right To Fair Trial"

The proposed Act limits what news media representatives and bloggers can report on court proceedings, but it also makes clearer than the current law where the line is between contempt and freedom of expression. More>>

ALSO:

Gordon Campbell: On Our Refugee Intake (And Uber’s Woes)

On figures released this week, there are currently 65.6 million people worldwide who have been displaced from their homes by war, famine or other external causes… More>>

ALSO:

IGIS Report: GCSB Support For Groser WTO Bid Not Illegal

“The inquiry has found that the GCSB did not act unlawfully or improperly in providing assistance to the New Zealand government campaign”, Ms Gwyn said. More>>

ALSO:

PM's Press Conference: Pike And Houses

There were questions on Pike River mine re-entry after new video from inside the drift was released over the weekend. English maintained a human effort would not be feasible irrespective of any future coalition demands from NZ First. He said the government would continue to work with families on non-manned re-entry. More>>

ALSO:

Flogging A Dead Horse: NZ First Seeks New s59 Referendum

10 years on from the so called “anti-smacking” law - NZ First calls for a binding referendum. NZ First MP Tracey Martin told TVNZ’s Q+A programme that the law change has had a “chilling effect” on NZ parents including herself. More>>

ALSO:

Always Interesting: Internet Party Has New Leader

The Internet Party has a new leader: Suzie Dawson... She currently resides in Moscow, Russia, where she has applied for temporary asylum due to severe persecution she reports being subjected to by those whose corruption she worked to expose.More>>

 
 
 
 

Opening The Election Supporters

 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages

Opening the Election
 
 
 
  • PublicAddress
  • Pundit
  • Kiwiblog