The lowest inflation since last century combined with rising unemployment and turbulent global markets is making a farce of monetary policy, says Labour’s Finance spokesperson Grant Robertson.
“New Zealand’s monetary policy is outdated and not fit to handle significant changes in the economy. This year is off to a volatile start already with markets plunging across the globe and major investor uncertainty. It’s important that we have up-to-date tools to handle it.
“Unemployment is rising and growth is steadily declining. Dairy auction prices fell again on Wednesday, inflation is at near-historic lows, and yet property rental prices keep climbing. With Auckland’s housing market out of control the Reserve Bank is between a rock and a hard place.
“It’s time for the Government to not only make a bigger contribution to tackling the housing market, they need to rethink monetary policy.
“The Reserve Bank hasn’t hit the 2 per cent midpoint of its inflation target since the current Policy Targets Agreement was signed in 2012 while unemployment has remained stubbornly high. That’s because inflation keeps bucking predictions and staying lower for longer.
“The current priority on inflation is hurting exporters and preventing businesses from investing in new jobs and opportunities compared to other countries with much lower interest rates.
“It’s time to broaden the objectives of the Reserve Bank to make job creation a critical part of its mandate to help deliver economic growth. This isn’t revolutionary – it’s similar to many reserve banks across the world.
“In a year which looks set to be one of the most unpredictable since 2008, National has to create modern tools to help the economy adapt and thrive” say Grant Robertson.