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


Federal Reserve action requires exchange rate action

Spokesperson for Finance

15 September 2012 MEDIA STATEMENT

Federal Reserve action requires exchange rate action

The Federal Reserve’s decision to continue quantitative easing will push our dollar even higher and demands action from New Zealand, says Labour’s Finance spokesperson David Parker.

“Quantitative easing is the new reality and there’s no telling how long it will last. We face competitive devaluation and ignore it at our peril.

“As a consequence exporting businesses and import substituters are shedding jobs and shutting down. Our economy is struggling under the weight of an inflated dollar.

“It is the responsibility of the Government to take action and help exporters and a key is broadening the objectives of the Reserve Bank.

“Around the world more and more economists are criticising the primacy given to inflation targeting over other aspects of the economy such as the exchange rate.

“Just last month Alan Bollard said: ‘In a globalised world, big players lowering their domestic interest rates, whether by QE or any other tool, will (all else equal) tend to promote capital flows to other countries and appreciation of their exchange rates. As a small open economy, New Zealand has often seen the effects of carry trades on the exchange rate. This can be distortionary and problematic, because an economy relies on its exchange rate as a signalling price.’

“National are backward-looking on this issue and refuse to consider solutions. On The Nation today Steven Joyce called any attempts to focus on the exchange rate a snake-oil solution, just as he previously dubbed critics voodoo economists. He simply substitutes insults for analysis.

“Increasing numbers of reputable economists have the contrary view, and even the outgoing Reserve Bank Governor has been forced to concede ‘it is a moot point’.

“The announcement that quantitative easing is continuing means that as a consequence our currency is inflated and our exporters and those losing their jobs are bearing the brunt.

“The objectives of the Reserve Bank need to be broadened.”

© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Panic In The Pacific Over China

For years, it has been no secret that China wants closer security and trade ties with the small nations of the Pacific region. All part of Beijing’s self-image as a global superpower. To that end this week, Chinese Foreign Minister Wang Yi embarked on an unprecedented 10-day tour of the Pacific, aimed at convincing his Pacific hosts to join a cross-Pacific agreement that would let Beijing provide them with high-level police training and security, shared data co-operation and other joint services ranging from agriculture to tourism...


Covid-19: Second Vaccine Booster For The Most Vulnerable
People who are at high-risk of getting very sick from a COVID-19 infection will soon be eligible to receive a second booster, COVID-19 Response Minister Chris Hipkins said today... More>>

Crime: Govt Helps Protect Shops From Ram Raids

The Government is providing further support to help Police protect small businesses affected by a spike in ram raids, Minister of Police Poto Williams says... More>>

Government: Investment Boosts Coastal Shipping In Aotearoa
New Zealand is a step closer to a more resilient, competitive, and sustainable coastal shipping sector following the selection of preferred suppliers for new and enhanced coastal shipping services, Transport Minister Michael Wood has announced today... More>>

PM Speech: Harvard University Commencement Speech - Democracy, Disinformation And Kindness

In Te Reo Māori, the language of the indigenous people of New Zealand, I paid tribute to all of the esteemed guests who stand here in this great forest of knowledge. It is a privilege to be here, and I thank you for the honour... More>>

Government: Independent Panel Appointed To Review Electoral Law
Justice Minister Kris Faafoi today announced appointments to the independent panel that will lead a review of New Zealand’s electoral law. “This panel, appointed by an independent panel of experts... More>>

Trade: Prime Minister To Visit United States
Prime Minister Jacinda Ardern is leading a trade mission to the United States this week as part of the Government’s reconnection strategy to support export growth and the return of tourists post COVID-19... More>>




InfoPages News Channels