Although I no longer have the time to keep up with the literature on financial stability policy (and so am not commenting on it – this is due to my switch to detail income data analysis), I still spend a bunch of time looking at the national economy and monetary policy.
I see that a section of my work place thinks we need the RBNZ to be more hawkish than it is. There are also many people who think lifting soon is madness. I am not personally not in either camp – I actually think the Bank has got this right now! The Bank’s decision to lift soon and get rates back to neutral does make sense given what they are facing, and that they are doing it the right way.
[As a disclaimer, I was more hawkish than the Bank during the crisis (I was wrong) – although my forecasts of economic variables were surprisingly accurate then, that was because their actions were more appropriate, not because I had any foresight … another indication of why forecast performance isn’t always the best judgment variable . From late-2011 until the end of 2012 I was more dovish than the Bank was. Now, I find their discussion consistent with my own narrative and models – including the discussion of the risk. So it is hardly surprising I’m so willing to defend them ]