Policy Targets Agreements

The inflation policy target has been missed regularly over the past two years, and will be missed for another year. The evidence is that the target has been moved. So by who? And will we be let in on the secret?

About this time last year, there was an overwhelming clamour from market players that New Zealand's interest rates must go up. I admitted at the time I was perplexed as to why, but presumably wiser heads prevailed. And so up went our interest rates.

And I remain perplexed.

Why is there this clamour for a rise in interest rates? Just what are we trying to achieve?

I truly don’t get it. Many financial market commentators appear to be saying that because the New Zealand economy is a rock star, we need to now endure an increase in interest rates.

I won’t argue here whether or not our rock star status is justified – I’ll leave that for another post (although I am at a loss as to why one would want to be in the same company as Miley Cyrus).