'Worse than unsatisfactory': RBNZ and Govt criticised over inflation, housing boom - Property News AU/NZ | propertynoise.co.nz & propertynoise.com.au

PHOTO: The New Zealand Initiative report has renewed criticism of the RBNZ’s handling of monetary policy. Photo: RNZ / Samuel Rillstone

The Reserve Bank and the Minister of Finance have been attacked over monetary policy and inflation by the free market think tank, the New Zealand Initiative.

In a report, Made by Government: New Zealand’s Monetary Policy Mess, senior research fellow Bryce Wilkinson has renewed criticism of the RBNZ’s handling of monetary policy before and during the pandemic, which left interest rates too low for too long resulting in inflation getting out of control, and stimulating the economy triggering the housing boom.

The paper said the RBNZ and many other central banks around the world were too confident about their policy frameworks, their economic models, did not pay close enough attention to keeping inflation in check, and then acted too late to correct their mistakes.

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It also said the RBNZ was distracted by its other mandate – maximising employment – along with a clutch of secondary issues such as climate change.

“New Zealand’s recent monetary policy outcomes are worse than unsatisfactory,” Wilkinson wrote.

“They include whiplashing house price volatility, consumer price inflation far above the RBNZ’s 1-3 percent target range, and a $9 billion loss on the Reserve Bank’s large-scale asset purchase programme (bond buying).”