I don’t want to imply that the short-term tactics are irrelevant – far from it – but they are very much less relevant than the longer-term issues, particularly when the Official Cash Rate itself is explicitly up for review on a regular basis. So today I want to address the question, What can New Zealanders expect of monetary policy in the long term?
The monetary policy framework is profoundly democratic The first point to note in answering that question is that the answer depends on what Parliament wants monetary policy to deliver. It is sometimes suggested that the Reserve Bank seems to be a law unto itself, and that Don Brash seems to run the country. Nothing could be further from the truth.