Wider monetary policy welcome, but could go further
“The Labour Party’s review of its position on monetary policy is to be welcomed,” said CTU Economist and Policy Director Bill Rosenberg today. The Labour Party is considering wider Reserve Bank objectives and an expanded set of policy tools.
“The CTU would welcome the broadening of objectives to include currency stability, full employment, and the economic prosperity of New Zealanders.”
“We also welcome Labour’s willingness to consider the use of tools other than interest rates to achieve these objectives, including prudential supervision tools. These would be a positive step but are unlikely to be sufficiently effective on their own to stabilise the currency while enabling other policies to be followed to achieve the new objectives.”
“We would urge them to consider tools now being used increasingly around the world such as controls on bank borrowing overseas, and the power to use exchange controls if necessary. An international financial transactions tax is being supported by many European nations and would help in stabilising the currency as well as raising revenue.”