Reserve Bank of New Zealand

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 Reserve Bank cannot deliver affordable housing by itself. Its actions have to be coordinated with the government's. Unfortunately the monetarist framework of the Reserve Bank Act obscures this.

The tensions between the Reserve Bank and the Government over housing policy go back to the mistaken economic thinking in the 1989 Reserve Bank Act. Monetarism ruled and it is that underlying monetarist approach which is creating the tensions.

While the Reserve Bank may have startled everyone by asking the government to take a fresh look at taxation on investment housing, the recent statement by the Deputy Governor indicates that we are inching towards a more holistic approach to macroeconomic policy. 

The April 15 statement  by Grant Spencer, Deputy Governor of the Reserve Bank and Head of Financial Stability, concluded ‘on the demand side, we consider that greater attention needs to be given to issues relating to the tax treatment of investor hous