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Posts Tagged ‘reserve bank’

Currency intervention: Two clips

Posted by David Cunliffe on November 11th, 2010

As the Kiwi dollar rises past 80c US and  70c TWI to unsustainable levels, the debate about currency intervention will become white hot.  Our manufacturing exporters are being killed out there.   Here is John Walley (MEA CEO) from TV1 Breakfast this morning.

Labour is calling for the Govt to get off its butt and use its armies of bureaucrats to get thinking about options.  It is not OK to cry “TINA” – ‘there is no alternative’.  There has to be, or manufacturing is finished in New Zealand and farmers are in for a rude shock when the commodity price spike ends.  

In this interview on TV1 Business (at the bleary hour of 6.10 this morning!) I advocate for tactical currency intervention by the Reserve Bank to knock the top off the spike, and monetary reform to help chart a manageable adjustment path.  That must be done alongside a clear stratagy for domestic industry adjustment – investment in the jobs of tomorrow and transitional assistance for displaced workers.   I wouldn’t usually post one of my own clips, but as no-one watched it and at that hour and as TV1 called it a stinging attack, RA viewers might find it interesting…

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Filed under: Uncategorized, bank, economic, economy, finance, international, trade
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OCR remains at 2.5% – now economy v english

Posted by Stuart Nash on March 11th, 2010

The Reseve Bank has held the OCR unchanged at 2.5%.  In the quarterly Monetary Policy Statement that accompanies each OCR announcement (see URL below), Governor Bollard has said (amongst many things): inflation predictions are around 2%, (however, there has been no modelling done for the proposed increase in GST and the cut in the top marginal tax rates for the 8% of Kiwis earning over $70K); GDP growth expected to be around 1% per quarter, or 4% per ann; and employment expected to drop by around one percentage point a year.  This begs a couple of questions / points:

1. if economy is expected to grow at 4% per year, then surely Minister English can now afford to give state sector employees a decent pay increase this year – remember he said last year possible wage freezes for up to 5 years.

2. if inflation is expected to be around 2% per year (without having yet modelled the impact of GST increases or tax cuts for the top 8%) then this implies a further reduction in the purchasing power for those 70% of extra-ordinary hard working kiwis earning $40k or less. 

3. Surely, with inflation forecast at 2%, and GDP growth forecast at 4% per year, the minimum wage has to increase more than the paltry 25c / hr given by the government last year.  Mr English? Mr Key?

Come on now Mr English and Mr Key – you have signalled what you are going to do for the 8% of kiwis earning over $70k/ann – now tell us what you are going to do for the other 92% – apart from increasing costs through increasing GST…

http://www.rbnz.govt.nz/monpol/statements/

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Filed under: GST, Tax
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Goff Speech on Monetary Policy

Posted by Grant Robertson on November 19th, 2009

Here is the link to the speech Phil Goff gave this morning to Federated Farmers. It covers a bit of ground but the major announcement is that Labour believes it is time to re-look at our monetary policy, and move beyond the narrow policy target of inflation to looking at how monetary policy works for growth and productivity, and in particular to manage the exchange rate.

For twenty years since the Reserve Bank Act was passed, there has been a bipartisan consensus between National and Labour over the policy targets and the primacy of price stability. The consensus between us continues on the independence of the Bank.

But today I am announcing the end of the consensus around the policy targets and tools of the Reserve Bank. Labour wants to see a step change in our export performance. We want policy that will keep our exchange rate as stable and competitive as possible. We want to reduce interest rates for businesses and home-owners, so that we put more money into the pockets of New Zealanders.

Working New Zealanders with mortgages will benefit from policy that tilts the emphasis away from its current sole concern with the holders of wealth, to a focus on creating wealth. Price stability and low inflation will still need to be important objectives for the Bank.We need to guard against people locking in higher expectations of price rises. The way they interact with other objectives will be an important part of our economic policy at the next election.

This is a really important discussion. Most exporters I speak to here in Wellington agree that we need to work towards a more stable exchange rate if we are to lift our export performance. Other countries take account wider issues in their monetary policy, and we should too. Labour is not pretending it has all the answers on this, but it is an essential issue for New Zealand to address to help our economy grow and improve Kiwis standard of living.

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Filed under: finance, jobs, trade
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Reserve Bank on Margins

Posted by Trevor Mallard on July 6th, 2009

Interesting article  here from the Reserve Bank on bank margins. They take issue with Westpac analysis. Easy to understand with clear graphs.

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Filed under: finance
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