There is a great deal of hindsight wisdom being brought to bear on the Reserve Bank's 'least regrets' actions. That meant it was prepared to run this risk, versus bankruptcies two years ago and following, and lots of unemployment, because it had held interest rates too high. I am interested in where the 'one third of the current 7.3% is …
There is a great deal of hindsight wisdom being brought to bear on the Reserve Bank's 'least regrets' actions. That meant it was prepared to run this risk, versus bankruptcies two years ago and following, and lots of unemployment, because it had held interest rates too high. I am interested in where the 'one third of the current 7.3% is down to the RB' estimation comes from. For a start, if that is right, which is very unlikely, then with a max target of 3%, the RB is not technically at fault for being responsible for a third of the 7.3% inflation rate (would be around 2.4% down to the RB). This kind of attribution is precious, and no modeller should be trying to cut this kind of cake as it is so misleading to people whose jobs aren't as economists.
I would challenge you Bernard to contact Arthur and ask him for references to the times (once, twice, dates?) he publicly over the period he is concerned about spoke out against the Bank's easing, explicitly saying he felt the downstream inflation risk was far too high. He may well have, but absent that for now, I am not impressed. At least it is noted here that this central bank was ahead of others in turning around. I would ask if the Aussie Reserve Bank is taking the same heat for its decisions, with their forecast annual rate to June 2022 at 6.2%? I have a strong feeling that the animus evident not just here but elsewhere in NZ econ commentary against our central bank has a different source from just the technical figures. It does not look at all good to me. There is a fundamental confusion here between the RBNZ's role in the 20/21 house price surge ( an unfortunate side effect of the necessity in 2020 uncertainty to drop interest rates sharply to keep the economy going) and decades of stupid neglect by Governments of NZ's housing market fundamentals. The RBNZ does not build houses. It has a decades long track record of research and accessible writing urging the Govts of the past to do something about supply of land, badly organised regulation and markets for materials - all to its credit. Govts simply have not listened.
Thanks Clive. I limited my estimate to those parts of inflation that could directly tied to the housing market. I know Arthur was very uncomfortable right from the start and said so in his version of the public, which may not be the same as the front page of the DomPost.
I was also critical of the money printing from the start. The RBNZ knew about the lack of supply elasticity and used it to generate a wealth effect, deliberately. It was effectively using an unfair social policy of making one segment of the population richer to achieve a monetary policy goal. I opposed that. But I also agree the Government (of both shades) deserve the real blame for creating the infrastructure shortages that led to the inelasticity. cheers. Bernard
There is a great deal of hindsight wisdom being brought to bear on the Reserve Bank's 'least regrets' actions. That meant it was prepared to run this risk, versus bankruptcies two years ago and following, and lots of unemployment, because it had held interest rates too high. I am interested in where the 'one third of the current 7.3% is down to the RB' estimation comes from. For a start, if that is right, which is very unlikely, then with a max target of 3%, the RB is not technically at fault for being responsible for a third of the 7.3% inflation rate (would be around 2.4% down to the RB). This kind of attribution is precious, and no modeller should be trying to cut this kind of cake as it is so misleading to people whose jobs aren't as economists.
I would challenge you Bernard to contact Arthur and ask him for references to the times (once, twice, dates?) he publicly over the period he is concerned about spoke out against the Bank's easing, explicitly saying he felt the downstream inflation risk was far too high. He may well have, but absent that for now, I am not impressed. At least it is noted here that this central bank was ahead of others in turning around. I would ask if the Aussie Reserve Bank is taking the same heat for its decisions, with their forecast annual rate to June 2022 at 6.2%? I have a strong feeling that the animus evident not just here but elsewhere in NZ econ commentary against our central bank has a different source from just the technical figures. It does not look at all good to me. There is a fundamental confusion here between the RBNZ's role in the 20/21 house price surge ( an unfortunate side effect of the necessity in 2020 uncertainty to drop interest rates sharply to keep the economy going) and decades of stupid neglect by Governments of NZ's housing market fundamentals. The RBNZ does not build houses. It has a decades long track record of research and accessible writing urging the Govts of the past to do something about supply of land, badly organised regulation and markets for materials - all to its credit. Govts simply have not listened.
Thanks Clive. I limited my estimate to those parts of inflation that could directly tied to the housing market. I know Arthur was very uncomfortable right from the start and said so in his version of the public, which may not be the same as the front page of the DomPost.
I was also critical of the money printing from the start. The RBNZ knew about the lack of supply elasticity and used it to generate a wealth effect, deliberately. It was effectively using an unfair social policy of making one segment of the population richer to achieve a monetary policy goal. I opposed that. But I also agree the Government (of both shades) deserve the real blame for creating the infrastructure shortages that led to the inelasticity. cheers. Bernard