Reserve Bank on holiday when inflation is out of control? We hear ya!

“Kiwis are probably wondering why Reserve Bank Governor Adrian Orr insists that taking three months off is a good idea while inflation is spiralling out of control, ACT hears ya,” says ACT’s Associate Finance spokesperson Damien Smith.

“In November I questioned the Governor about his plans to take the summer off, with the next OCR announcement not scheduled until February.

“Orr said, “February is fine” and that the committee will only reconvene if there are major economic shocks.

“Not so long ago, the Reserve Bank complained that New Zealand’s inflation statistics are only published quarterly. They had a point, but over summer the Bank itself makes monetary policy decisions on quarterly time.

“The Monetary Policy Committee is supposed to keep inflation under 3 per cent. Currently it’s 7.2. That is hardly the kind of high performance that deserves a long break.

“Kiwis trying to pull together a family bbq over summer, or catch up on some DIY around the house are finding everything is too expensive due to inflation. The Governor owes it to Kiwis to be considering monetary policy that affects these prices regularly.

“The Monetary Policy Committee usually meets every six weeks. In the days of disappearing inflation, the decade leading up to COVID, a three-month break was fine. We now have a cost of living crisis, and the Monetary Policy Committee needs to take it seriously, frequently.

“ACT is calling for the Monetary Policy Committee to work right through, and hold a meeting in six weeks, in early January. Given the pressure that inflation and rising interest rates are putting on households up and down New Zealand, the least that the Monetary Policy Committee could do is come back early from the beach. After all, its they who are missing their 1-3 per cent inflation target by 4.2 per cent right now.”

‍