Parliament

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

 

Reserve Bank In A Pickle And Not Helped By A Spendthrift Finance Minister

Today’s move by the Reserve Bank to raise the Official Cash Rate by 25 basis points to 0.75% is what most commentators were picking given the worrying direction that the cost of living has taken, says National Shadow Treasurer Andrew Bayly.

“Kiwis across New Zealand will have noticed the cost of living rising rapidly this year.

“Prices have been rising at the fastest rate since the David Lange government. They’re also rising faster than wages, meaning the average wage earner has gone backwards over the last year.

“As expected, today the Reserve Bank has responded by hiking interest rates, meaning many Kiwi families will see more of their income going to service their mortgage. Many economic commentators are anticipating the Bank to ramp up interest rates over the next year in the most aggressive monetary tightening cycle in more than 30 years.

“An increase in interest rates will also likely see an appreciation of the Kiwi dollar, which won’t be good for our exporters.

“The quantum of the Reserve Bank’s large scale Government bond-buying programme (LSAP) – designed to keep interest rates low when they were unable to lower the OCR into negative territory – is also troubling. The Bank underestimated rising inflation earlier this year, describing key price shifts as one-off, and persevered with its bond buying. The Bank has purchased more than $55 billion of Government and local body bonds.

“The scale of quantitative easing, supplemented by its ongoing provision of cheap money to banks through the Funding for Lending Programme, means that there’s been an avalanche of money in the economy chasing assets.

“The LSAP programme was not without risk to the taxpayer. The Reserve Bank has so far booked $5.7 billion of losses in respect of its purchases. That’s almost double the $3 billion that Finance Minister Grant Robertson quietly put in Budget 2021 for this contingency.

“The Minister had the opportunity to better manage the scale and risks of the LSAP programme when the Governor sought an indemnity from the Government for potential losses. Grant Robertson needs to take some responsibility here and cannot entirely hide behind central bank independence.

“And now that inflation looks like over-shooting the Reserve Bank’s target, it is faced with having to hike interest rates as well as the difficult question of how to exit from its Government bond portfolio. Why didn’t they think of that before they got into it? And why didn’t Grant Robertson insist on a more well-thought-through strategy when he agreed to indemnify them for it?

“The situation has been further compounded by the Government ramping up spending by 40 per cent since coming into office. A significant proportion of this has been on low value, low priority programmes with no discernible benefit. This has further driven inflation up.

“National has repeatedly called on Grant Robertson to pull back on this stimulation in the face of the inflationary effect it has been having and the clear evidence that stimulation is no longer required.

“He has given no indication that he intends to do so. Indeed, his blunt refusal to disclose what additional spending is being met from his $41 billion of Imprest Supply is an ominous sign that he intends to keep on spending.

“All this bodes badly for New Zealand and for business especially.”

© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Government: Traffic Light Levels Announced


The levels at which different parts of New Zealand will move forward into the COVID-19 Protection Framework this Friday have been announced. Northland, Auckland, Taupō and Rotorua Lakes Districts, Kawerau, Whakatane, Ōpōtiki Districts, Gisborne District, Wairoa District, Rangitikei, Whanganui and Ruapehu Districts will move in at Red... More>>

ALSO:


Gordon Campbell: On Omicron, And The Bridges/Luxon Dilemma


At this early stage, the Omicron variant seems to be more infectious, and more able to bypass the protection offered by vaccines and by the antibodies generated by previous infection. The fact that it is being spread around the globe by travellers who were all presumably fully immunised and had pre-flight negative Covid tests is a bit alarming. Even so, it is still unclear at this point whether Omicron is likely to result in higher rates of hospitalisation and death than the Delta variant. Omicron will make you sick. But how sick..? More>>




 
 


Government: New Law Will Clear The Air For Tamariki In Vehicles
From today, it’s illegal to smoke or vape in most vehicles carrying children aged under 18 years old - whether the vehicle is moving or not. “Second-hand smoke poses an unacceptable risk to our tamariki and rangatahi,” Associate Minister of Health Dr Ayesha Verrall said... More>>



Government: Workplace Vaccination Requirements Extended To Cover Police And NZ Defence Force

Workplace Relations and Safety Minister Michael Wood announced today that workplace vaccination requirements will be extended to include the New Zealand Police and Defence Force in preparation for the transition to the new COVID-19 Protection Framework on 3 December 2021... More>>


RNZ: Judith Collins removed as National Party leader
Dr Shane Reti is interim leader of the National Party after Judith Collins lost a no-confidence vote. Simon Bridges was demoted and stripped of all portfolios over allegations of an inappropriate comment made five years ago at a party function. Judith Collins was voted out as National's leader today after the party was locked in a caucus for more than three hours... More>>



AUT: Aucklanders Are Less Concerned With Covid
In reaction to commentary that Aucklanders are at breaking point after more than 100 days in lockdown and that compliance with the rules is under threat, AUT Emeritus Professor of Sociology Charles Crothers says... More>>

National: Launches First Step To World-class Tech Sector

Leader of the Opposition Judith Collins says technology will create exciting careers and higher paying jobs and has the potential to transform the New Zealand economy... More>>

Council For Civil Liberties: Disgraceful Government Secrecy On Vaccination Certificates As Legislation Rushed Through
On the eve of legislation to enable vaccination passes being rushed through Parliament under urgency, the Minister has said it will not publish the relevant policy papers until ‘late January 2022... More>>

 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels