Prime Minister John Key sees little need for any change to how the Reserve Bank manages monetary policy.
As the National Business Review revealed 10 days ago, the Treasury has floated several possible changes when the policy targets agreement is re-negotiated with the new Reserve Bank governor later this year.
One is moving to a committee model, as followed by other central banks: another is to more formally include reference to the impact of the new prudential rules and the effect these are having on retail interest rates.
However Mr Key said yesterday he sees little need for change.
The government might want to “tweak things at the margins,” he said, but the current approach had served New Zealand well, he told his post-Cabinet press conference.
“I think for the most part we have world’s best practice and it’s served us pretty well. It’s not perfect, but it’s the best system that we can see and it’s actually consistent with what most other countries do," Mr Key said.
He cited specifically the inflation target band of 1-3% as something which should remain unchanged.
“I think we are at the right place at the moment…the 1-3% band is about right.”
Comments and questions
In saying this Key shows an unfortunate lack of economic vision.
We need to increase interest rates to attract savings and build some domestic investment capital. Without this our economy will continue to stagnate.
Our leaders must develop some ability to be able to develop and pursue a plan for growth.
peter martin
Our interst rates are some of the highest in the world already. We are also AAA rated. Plenty of money is flowing into NZ. But rates need to be low enough to encourage businesses to borrow. If they cant afford interst payments, they wont borrow.
High intest rates pull money out of the real economy.
This is far below even basic economic concepts.
All low interest rates do is encourage people to speculate and borrow up to the hilt in residential property as in Auckland. I t does not necessarilly go into productive areas. Low interest rates have not helped America or Japan.
So I suppose the failing centrally-planned, fiat currency economic model is not up for review either?
So people, our leader Mr Key is saying "this is as good as it gets" "we are first and foremost slaves to doctine"
no new ideas, but what is more and more disturbing minimal inclination to even consider any fine tuning let alone substantial change
Has the current model served NZ well? that is where the debate should center
in comparison with some other countries the answer is yes (most of Africa), in comparison with others (Asia,China in particular) clearly no
it is time to look at those countries that have prospered better than NZ over the last 20 years to ascertain what they have done.right,
to look at those that have done worse to see what they have done wrong, and then ascess what we need to do differently to progress this country
that is what a true govenor of any company, corporation or country ought to have as their basic mode of operation
Come on Mr Key it is time for the Government to act like Govenors
Right on the button gaffer.
Monetarism is nothing but a theory taught at uni by a lecturer who in turn learnt it at Uni from a lecturer who in turn learnt it ............................
The real economy is peeps truckin' and tradin' with one another using a means of exchange they can trust.
It is the Governments responsibility to maintain the integrity of our currency by being a good government.
To abdicate that roll to an "independent" body is wrong.
The Government is the biggest driver of inflation, the councils come a close second with pseudo monopolies (Fonterra) next.
what about becoming world leaders in carbon trading where no one else is interested? what about a cycle way? Or...perhaps a free twaddle agreement with the bankrupt US? Or....even better, lets give away $millions to global "alliances" on hot air solutions as the planet cools. Come on Mr Key lets go the whole hog and slap up the back ground effect on consumption taxation to 25.94% with the emissions scam.....next, lets get liarbour back in...we could all do with a capital un-gains tax....
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