RBNZ must explicitly target non-traded inflation

RBNZ must explicitly target non-traded inflation

The New Zealand Manufacturers and Exporters Association (NZMEA) agree with Bill English that non-traded inflation is a tax on the export sector, but ask what is being done to stop this tax. English made the comments at the Herald's Mood of the Boardroom debate this morning.

NZMEA Chief Executive John Walley says, “Bill English’s comments are right on the money – non-traded inflation has tracked at around four percent regardless of the Official Cash Rate level and yes that is a direct tax on exporters. Or put another way, a politically popular wealth transfer from exporters to consumers.”

“What we need are changes to our monetary and fiscal policy framework to prevent this.”

“The same issue was put to the Reserve Bank a few months ago and the response, while underwhelming, was that this was a possibility.”

“Exporting is a minority activity in New Zealand but in the end we all depend on exporter’s ability to earn us all a living in the world. We have been asking exporters to write on the issues they would like to see addressed by the Government (these articles are available at www.changenz.co.nz ) - the impact of monetary policy on the exchange rate tops the list.” “It does not make any sense to address a non-traded inflation problem by adding costs to exporters. If we want to see an export led recovery then this must stop.”

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