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

 

Overseas Investment: Auditor-General To Examine OIO

The Auditor-General is to examine how the Overseas Investment Office collects and manages information following a request from the parliament's finance and expenditure committee. More>>

ALSO:

Gordon Campbell: On Bill English Living In Denial

The working poor have been a direct byproduct of the economic policies in vogue for the past 30 years or more, all over the Western world... That anger was evident in the Brexit vote, and it underlies the support for Donald Trump in the United States. More>>

ALSO:

Final Reading Of Parental Leave Bill: Families With New Babies Victims Of Veto

“For the first time ever, a Bill will have a third reading debate and no vote will be taken at the end because the National Government has used its veto – an extreme measure against families,” says the Bill’s sponsor, Labour MP Sue Moroney. More>>

ALSO:

Water, Pests, Erosion...: Commissioner Releases Mixed Report Card On Environment

The Parliamentary Commissioner for the Environment has released a mixed report card in her assessment of the state of New Zealand’s environment. “We are lucky to live in an exceptionally beautiful country, but we have some big issues to face up to” said Dr Jan Wright. More>>

ALSO:

Education: Private Schools Beneficiaries Of Extra Cash

“Not only did this year’s Budget freeze operational funding for state schools, but 86 per cent of secondary school principals say they don’t get enough funding, and the demand for school donations from parents is rising at 10 times the rate of inflation... Now we’ve got Hekia Parata proposing more cash for private schools." More>>

ALSO:

Shop Hours Bill Second Reading: Government Blocks Easter Trading Petition

The union representing retail workers is warning that the Government is out of touch with working people after passing the second reading of the Shop Trading Hours Amendment Bill, a law handing local authorities the power to permit trading on Easter Sunday. More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news