There is “no possibility” any proposed changes from a government review of how the Reserve Bank operates will be legislated for before the 23 September election due to the amount of law changes already in the pipeline, Prime Minister Bill English says.
Finance Minister Steven Joyce has asked Treasury to look at “a couple of issues” regarding how the RBNZ operates, a spokeswoman for Joyce told interest.co.nz, after English said at his weekly post-cabinet press conference that Treasury was looking into a number of “technical” changes.
These were on the Bank's governance and whether the government should formalise a committee structure within the Bank for OCR decisions, as the Bank already operates an informal committee structure, Joyce’s spokeswoman said.
The review is also set to look at whether the Bank should be responsible for reviewing its own legislation.
“Treasury have contracted [State Services Commissioner] Iain Rennie to do some preparatory work for them on the Bank governance and committee decision making matters – prior to preparing some policy advice for the Minister,” the spokeswoman said.
Meanwhile, English hinted Treasury might look at whether a rate-setting committee could include non-Reserve Bank personal. That would be a matter for the review, he said.
It was reported on Saturday that Joyce had requested work on the merits of a rate setting panel. The Reserve Bank Governor has sole responsibility for setting the OCR, although current governor Graeme Wheeler has introduced an informal internal committee for OCR decisions.
The move by the government came as Labour announced it would introduce a change for the OCR to be set by a committee comprising four Reserve Bank staff (Governor, two deputies and chief economist) and three external members. Labour would also give Treasury a non-voting seat on the committee.
Speaking to media at his post cabinet press conference Monday, English said the discussion from here was “whether the legislation should reflect the practice.”
“There are some other issues they’re looking at…of a fairly technical nature,” English said. No significant changes in how monetary policy worked were being suggested, “because the recent evidence is that the policy’s underpinned a pretty strongly growing economy and we wouldn’t want to mess around with it.”
Meanwhile, regarding advice from Treasury in 2012 that government should look at shifting to a rate-setting committee process, English said that at the time there were higher priorities around managing the economy.
Labour on Monday also suggested that the Reserve Bank Act should be altered to include ‘full employment’ as a formal goal for monetary policy alongside the Bank’s existing price stability target.
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Speaking to media at his post cabinet press conference Monday, English said the discussion from here was “whether the legislation should reflect the practice.”
“There are some other issues they’re looking at…of a fairly technical nature,” English said. No significant changes in how monetary policy worked were being suggested, “because the recent evidence is that the policy’s underpinned a pretty strongly growing economy and we wouldn’t want to mess around with it.”
Given past outbursts, the PM may wish to review the apparent failure of a string OCR cuts to spur an expected, if not directly demanded, CPI metric rise.
New Zealand central bank Governor Graeme Wheeler needs to get inflation back to target and some observers think he has “plenty of room” to cut interest rates, Finance Minister Bill English said.
“He’s been out of the zone for years now, below the midpoint for quite a long time,” English said in an interview late Thursday, referring to Wheeler’s 2 percent inflation goal. “He’s meant to be following the Policy Targets Agreement, that’s the bit I look at, and one day somebody will start asking the minister of finance questions about whether he’s actually following the agreement or not.”
The PTA between English and Wheeler stipulates that the Reserve Bank governor must keep inflation between 1 percent and 3 percent on average over the medium term, with a focus on the 2 percent midpoint. That target will be missed for a fourth straight year in 2015, with inflation currently running at just 0.1 percent. Wheeler, who raised borrowing costs four times in 2014, last week cut the benchmark rate by a quarter percentage point to 3.25 percent and said one more reduction was possible. Read more
why don't they put house prices in that inflation measuring basket? Even the low 5% ones. As this is one of human fundamental needs, maybe that might have a knock on affect to all other policies?
https://en.wikipedia.org/wiki/Fundamental_human_needs
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