Wouldn’t life be much better if we simply did away with such intervention, and allowed pure market forces to determine interest rates? Hasn’t the Reserve Bank, and the way in which it has run monetary policy under the Reserve Bank Act of 1989, caused New Zealand’s huge balance of payments deficit, and won’t pushing up the Official Cash Rate simply make matters worse?
Why did the Bank increase the Official Cash Rate as the economy was just beginning to emerge from the recession? Surely it was inappropriate to tighten policy when the Government Statistician has shown that inflation in the latest year was below the mid-point of the 0 to 3 per cent inflation target?