Note: Other posts in this discussion are available under the tag “inflation debate“.
So Trevor Mallard is suggesting that New Zealand “re-thinks” its interest rate policy.
Now his statements that the currency is a “one-way bet” is thinking that is associated with the NZX, while his statement that higher interest rates may have caused the housing bubble is the thinking of Berl – they both stem from submissions to a monetary policy review by the Parliament’s Finance and Expenditure Committee.
In fact, at the time I wrote about both of them, here for NZX and here for Berl. Overall, I felt that both of these organisations were completely wrong – which is why I’m so troubled that the current government has decided to follow their ideas.
Now given that I have discussed this business before I would like you guys to leave some comments saying what you think about the monetary policy framework and how you think it could be improved. I will then write some posts discussing the issues raised. Hopefully some people actually comment to this post :p . Please please please, write what you think 🙂
Note: I am not going to comment on this post, although I will be reading all the comments and thinking about them. Furthermore, and other blog members may comment. Feel free to say whatever stuff you feel about inflation and policy on it, and I will try to pull it all together later on.
Links to other posts discussing this issue can be found under the flap:
Homepaddock: Initial response (*)
Kiwiblog: Initial response (*)
NZ Herald Articles: Initial response – with some insightful comments by Bill English! (*)
“We think it is just the wrong time to throw the framework away, because the only reason the Reserve Bank can look through oil and food prices and let inflation rise is because they believe inflation expectations are anchored well below 3 per cent.” – that is exactly right … in my opinion 🙂