This blog isn't about whether you agree or not with the RBNZ's decision to keep the Official Cash Rate (OCR) at the same level today - its about whether the Bank has any regard for the new law that it is now meant to obey. The National-ACT-NZ First coalition made it very clear to the Bank when it changed the law that its sole focus should now be on price stability, certainly not some combination of low inflation & high employment, as existed before. Under the old law that was recently revoked, sometimes called "the dual mandate", the case for keeping the OCR unchanged today was strong - since doing so would help keep unemployment low. But under the new "single mandate", which requires the Bank to focus solely on inflation, it's a no-brainer that interest rates should have been increased, even at a cost to pushing unemployment (and mortgage rates) up. The entire ANZ Bank economics team, based on their own sophisticated forecasts of inflation, worked out, and made public statements, that the OCR would have to rise to get inflation back on target, given it is still close to 5%. By hey, what does the RBNZ care about the law?
National, ACT & NZ First stated in no uncertain terms that a new Sheriff is in town and the RBNZ should no longer weight employment in its decisions. The Bank has chosen to ignore the Sheriff. So, yes its true - crime is on the rise - not just on the streets, but also amongst the well-heeled folks working next to the Beehive in the Reserve Bank building at 2 the Terrace. They're going about their business pretending the law governing how monetary policy is to be conducted was never changed. So much for Willis, Seymour, the new coalition & majority of the NZ public. Just pretend they never happened. Some people are above the law.