Indeed, good points – even if an authority is only focused on monetary policy, they have to communicate how ‘other’ policy changes influence their decision!

I would state that this makes sense, but trying to influence other democractically elected policy makers through your decisions is outside the scope of a central bank – and is definitely not something I would expect to be recommended. However, on your recommendation I’ll give the annual report a read – probably in about a fortnight 😉

I’m more sympathetic to the idea that central banks should speak up on non-monetary policy matters, but I’m not sure you can make a clean distinction anyway. For instance, when the RBNZ says (as they often have) that high government spending means that interest rates will have to be higher than otherwise, on the one hand they’re simply being transparent about the tradeoffs in their framework (which I think you’d approve of Matt). But it’s also not hard to read it as a not-so-subtle dig at the government – “if you want to get interest rates down (which tends to be a vote-winner), then you’ll need to cut back your spending.”

Very true. And Agnitio also pointed me at the Nick Cater talk yesterday!

You’ll probably like the upcoming Nick Cater talk….