Parties Should Support RBNZ Amendment Bill

Parties Should Support RBNZ Amendment Bill To Select Committee – 23 August

The New Zealand Manufacturers and Exporters Association (NZMEA) is encouraging political parties to support the RBNZ Amendment Bill to the select committee stage. The Bill proposes changing the wording on the primary function of the Reserve Bank

This is the proposed wording:
“The primary function of the Bank is to formulate and implement monetary policy directed to the economic objective of maintaining stability in the general level of prices while maintaining an exchange rate that is conducive to real export growth and job creation.”

NZMEA Chief Executive John Walley says, “Across the political spectrum we have agreement that the New Zealand Dollar is too high and volatile. Supporting this Bill through to the select committee stage will create open debate on the issue and perhaps some action will follow. The world is a different place today than it was in 2007 when monetary policy was last reviewed.”

“The changes to the Reserve Bank Act need to be debated - what are the targets, what are the mechanisms, how will the decisions be made, who will make those decisions and how will the Reserve Bank board be constituted. All political parties should support the Bill through to a select committee phase and front up to the arguments. What we have at the moment is not working.”

“A number of central banks around the world have taken action to prevent the overvaluation of their currency so there is now plenty of international evidence to call on. The United States Federal Reserve has just announced it is likely to have another round of quantitative easing, Canada has introduced loan to value ratios to prevent demand for household debt from pushing up their currency and Switzerland has been intervening for over a year to lower the value of their currency.”

“Lowering the exchange rate is the precursor to balancing the economy through export growth. Openly exploring options on how to achieve this has to start somewhere.”

ENDS

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