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  • Robert MacCulloch

The Reserve Bank versus the ANZ Bank

Amusingly (if that's the right word?) the Reserve Bank of NZ's Monetary Policy Committee seems to be the only group in the country which doesn't think prices are on the rise.


The latest ANZ Business Outlook survey showed measures of inflationary pressures have soared. "Reported costs are through the roof ..." says ANZ chief economist Sharon Zollner.


Meanwhile, down in Wellington, the RBNZ's Monetary Policy Committee, which sets the Official Cash Rate, stated a few weeks ago, on 14th April, that:


"Some temporary factors are leading to specific near-term price pressures ... However, the Committee agreed that medium-term inflation ... would likely remain below its remit target in the absence of prolonged monetary stimulus ... The Committee agreed to maintain its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained at the 2 percent per annum target midpoint".


Take your bets: the RBNZ versus Sharon Zollner. My money's on Sharon (!).


My reading is that the RBNZ has made a mistake ploughing ahead with its $100 billion Quantitative Easing Program in the face of sky-rocketing house prices and growing evidence that consumer prices are on the rise, but doesn't want to admit the mistake and isn't sure how to extricate itself so is sticking with the old plan and digging deeper.