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National signals opposition to monetary policy changes

National finance spokesperson Amy Adams has voiced the party’s opposition to giving the Reserve Bank a dual policy mandate.

Thursday, July 26th 2018, 4:00PM 1 Comment

by Dan Dunkley

Today marked the first reading of the Reserve Bank Act of New Zealand (Monetary Policy) Amendment Bill. The bill, if passed, is expected to set employment alongside inflation within the central bank’s monetary policy mandate.

The new policy targets agreement (PTA)  requires monetary policy to be conducted so it supports maximum levels of sustainable employment. The Bill is expected to pass its first reading tonight. Under the new PTA, the Reserve Bank still has to keep future annual CPI inflation between 1 and 3 percent over the medium-term, with a focus on keeping it close to 2 percent.

In Parliament today, Adams questioned why the dual mandate had been introduced “given the employment rate was so low when this government came into office, and there has never been a tension between unemployment and inflation since the Reserve Bank Act came into force nearly three decades ago”. The party is set to vote against the dual policy mandate.

In response, Finance minister Grant Robertson said monetary policy should “contribute to the growth of a more productive and sustainable economy”. Robertson said he wanted to look after the “real economy” by keeping tabs on employment numbers. He added countries that have a dual mandate "tended to keep unemployment under control better” than those with a single mandate.

The new PTA has received support from economists including Westpac’s Dominick Stephens, who described it as a “formalisation of the bank’s existing flexible approach”.  The changes will bring RBNZ monetary policy closer in line to the US Federal Reserve and the Reserve Bank of Australia.

Tags: Adrian Orr RBNZ Reserve Bank

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Comments from our readers

On 27 July 2018 at 3:38 pm Good Hamish said:
Have I missed something? Is this a little like asking a baker to use his oven to operate the till?

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ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
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BNZ - Mortgage One 6.50 - - -
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Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
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Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
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HSBC Special - - - -
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ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
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Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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