monetary policy

The Government’s new arrangements with the Reserve Bank represent an explicit acknowledgement of a major shift in theoretical underpinnings; whether it makes much change to the Bank’s operations is another matter.

One of the residuals of Rogernomics (neoliberalism) that the Clark-Cullen Government left unfinished was monetary policy. The Ardern-Peters Government seems to have taken on the challenge.

The retirement of the Governor of the Reserve Bank of New Zealand leads to a reflection on what has been really going on.

During Graeme Wheeler’s five-year term as the Governor of the Reserve Bank (RBNZ), consumer prices rose 1.05 per cent annually.

Are Labour’s proposals for the changing the way the Reserve Bank operates sensible or nutty (as nutty as the current legislation)?

Section 8 of the 1964 Reserve Bank of New Zealand Act stated that ‘monetary policy of the Government ... shall be directed to the maintenance and promotion of economic and social welfare in New Zealand having regard to the desirability of promoting the highest degree of production, trade, and employment and of maintaining a stable internal price level.’

The times are a’changing, as recent macroeconomic fashions are being abandoned and old verities are being restated. 

Alan Blinder, an American economist, described as ‘one of the great economic minds of his generation,’ was an economic adviser to President Clinton and was a Vice Chair of the American Federal Reserve (central bank). He is known to many as the co-author of an extremely successful textbook.

Pretending it can, or that the Reserve Bank of New Zealand can function independently from the rest of the world, could generate a financial crash. 

The very joining of monetary policy and fiscal policy into a single phrase is a criticism of the neoliberal macroeconomics. The reconfiguration under Rogernomics assumed that the two could be administered independently of one another, and gave an authority and power to monetary policy beyond what any reasonable analysis would conclude.