Yes, its school holidays at present. The Reserve Bank's MPC meets only several times a year to do the hugely important task of setting interest rates. We're presently in the middle of a recession that, in the words of the RBNZ Governor, was "engineered" by the Bank, costing the livelihoods of millions of Kiwis. The high inflation we're experiencing was largely caused by the RBNZ as it unnecessarily printed $50 billion, flooding NZ with liquidity during 2020-22.
As noted by this Blog, it was obvious at the time it was unnecessary because NZ had one of the largest fiscal expansions in the world over that period (financed by debt) so we already had been insured against the adverse economic effects of the pandemic (using tools like the wage subsidy scheme). In the midst of our current economic chaos, the Reserve Bank's small Monetary Policy Committee met this week to set the OCR - except its Chief Economist, who's a key member, having prepared the forecasts that the decision is based upon, was not there. Much of Wellington's management class don't physically go to work anymore - they're based in places like the Hutt and Kapiti Coast attempting to run the country (and Interisland Ferry) on Teams and Zoom.
As for the Reserve Bank, having a crucial member of the MPC away during school holidays when the nation is being crushed by high interest rates is remarkable. Maybe in a few months when all Members are back they'll get round to cutting rates. How come the Chief Economist was not listed as an "apology" in the formal meeting record below? In the list of attendees, Bob Buckle, Carl Hansen & Prasanna Gai are external members - they do not work at the Bank - so the absence of its Chief Economist reduced the government's contribution from 4 members to 3 members, a cut of 25%, and took away "the people's" majority on the Committee.
Attendees
MPC members: Adrian Orr (Chair), Bob Buckle, Carl Hansen, Christian Hawkesby, Karen Silk, Prasanna Gai. Treasury Observer: Tim Ng. MPC Secretary: Chris Bloor.
Sources:
https://www.rbnz.govt.nz/hub/news/2024/07/ocr-5-50-inflation-approaching-target-range
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
MPC members: Adrian Orr (Chair), Bob Buckle, Carl Hansen, Christian Hawkesby, Karen Silk, Prasanna Gai. Treasury Observer: Tim Ng. MPC Secretary: Chris Bloor.
Sources:
https://www.rbnz.govt.nz/hub/news/2024/07/ocr-5-50-inflation-approaching-target-range
Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.
2 comments:
Every single central bank operates in the same way that is they issue debt. The currency which central banks create and then issue are not units of wealth, they are units of debt.
The currency issued by central banks overall itself is debt, which they own. The currency overall is then owed back to the issuing central bank plus interest, which they then create out of thin air.The more debt any given central bank can issue, or is called on to issue, the stronger they become.
Every single central bank power resides in just one thing! Their ability to inflate! Or their ability to issue more debt. The mechanism of currency devaluation is the key component which allows a central bank to gain control and increase their stranglehold on the world.
I cannot believe that with such a simple goal as the setting of the OCR is so complex that it requires the concerted wisdom of so many well paid supposed experts. Most of the skill seems to be in devising a degree of originality for the vague weasel words to go with every change to conceal the temporary pot shot element.
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