Meanwhile, the central bank’s primary focus on inflation recognizes that monetary policy needs to be based on a single instrument and policy objective. Pursuing multiple objectives with multiple instruments, as Labour now suggests, is a recipe for incoherent policy and poor economic performance such as New Zealand experienced before its path-breaking reforms of the 1980s.
I didn’t take Marty G’s post—or Cunliffe’s—seriously, because for all the storm and stress about “hot money” coming from overseas, there’s a certain obliviousness to the fact that for debt to happen, for mortgages to happen, for credit to happen, someone has to borrow in addition to there being someone willing to lend. Why ignore half of supply & demand?
This is THE point that is CONSTANTLY being ignored. Never have I seen so many smart people ignore a demand curve for so long.
Update: I should point out that Westpac is also making the point on demand, good on you guys 😉 . I don’t actually receive weekly updates from any of the other banks, if any of them are saying it as well could someone tell me in the comments and I’ll link.
Good work everyone. Hopefully someone is listening …