The Former RBNZ Assistant Governor & Chief Economist Slams the RBNZ
In what must amount to extremely damaging comments, John McDermott, who is the Director of Motu and winner of this country's most prestigious award for economists, a Yale PhD graduate, the former Chief Economist and Assistant Governor of the Reserve Bank and who has worked at the IMF & National Bank of NZ, writes in the NBR today:
"Just when we needed a disciplined monetary policy framework the most, the Reserve Bank started an excessive quantitative easing programme & talked, in my view, recklessly about negative interest rates. This loss of commitment saw inflation expectations rise sharply and allowed inflation to become a substantial economic and social problem".
John has fully endorsed comments we've been making at DownToEarth Kiwi for over a year now, as well as comments made by the likes of Richard Prebble in the NZ Herald. He's even accused the RBNZ of acting "recklessly". John adds:
"Sadly, the Reserve Bank lost sight of its primary goal of keeping inflation between 1% and 3%, just as the structural forces keeping inflation in check have receded. Worse still, the Reserve Bank failed to recognise the inflation consequences of the supply disturbances of the Covid pandemic".
He says the bank "lost sight" of its' inflation target. Hang on - that target is a legal target. It is not discretionary. It was agreed and signed off by the Minister of Finance and Reserve Bank Governor. The US Federal Reserve has no such agreement that it is acting under.
Yes, the former Chief Economist of the Reserve Bank has concluded that the RBNZ and Finance Minister have no interest in meeting their sworn agreement. Should be headline news in the mainstream media.