The Reserve Bank has today published an update on its progress in responding to recommendations from its review of monetary policy over the 2017 to 2022 period.
It has also released new work reviewing the MPC’s response to above-target inflation from 2021 to 2024.
“In hindsight, an earlier or more aggressive tightening might have reduced inflation sooner,” Reserve Bank chief economist Paul Conway said.
“But this would have been difficult given the data available at the time and could have conflicted with the MPC’s mandate back then, which included maintaining maximum sustainable employment.”
This is quite telling. The Reserve Bank Chief Economist says that if it were not for Labour’s law change, the Reserve Bank could have acted faster in reducing inflation. So Labour both caused the inflation, and also stopped the Reserve Bank from getting it under control earlier.
David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders
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