“We seek him here, we seek him there, but the bogeyman the Reserve Bank tamed in 2020 cannot be found in its newly released five-year review. Instead, there is only a pile of debt and inflation for Kiwis to deal with,” says ACT Leader David Seymour.

“The Reserve Bank’s report and supporting press release are desperate to show the Bank’s actions saved us from disaster. Instead, it shows they printed too much money for the wrong reasons and all we’ve got left is inflation.

"Parts of the report are risible, such as the ongoing game of blaming the Ukraine War for things that happened in 2021. The report says "Likewise, in hindsight, the Committee could have raised the OCR earlier. Importantly, however, beginning the monetary policy tightening earlier in 2021 would not have fully offset the strong inflationary impulse stemming from a series of supply shocks, including Russia’s invasion of Ukraine." It is almost as though they were waiting for another excuse to come along, and Putin invaded Ukraine just in time!

“One of the report’s central claims is that the nearly $60 billion dollar Large Scale Asset Program was necessary to avoid ‘financial system dysfunction.’ However, the LSAP was far too large for that purpose, it was not stopped but expanded when economic forecasts improved.

“In March 2020 the Reserve Bank cut the Official Cash Rate to 0.25 per cent, and signalled this would be in place for the next four revisions, for a full year. In April it announced the Large Scale Asset Purchase program, effectively printing New Zealand Dollars to buy Government debt.

“The LSAP was announced with a limit of $30 billion when the Bank’s assumption was that GDP would drop 23 per cent in Q2. In reality it dropped only 10 per cent, and rebounded strongly in Q3. This should have been a sign that the Reserve Bank was overdoing it.

“Instead they extended the Large Scale Asset Purchase program two more times, in June to $60 billion then in August to $100 billion. Far from making sensible decisions at the time, the Reserve Bank was pumping the economy with cheap credit whether it was needed or not.

“The Bank will no doubt claim that the economic outlook improved because of their stimulus, but the fact they kept stimulating shows they were not responding to the evidence in front of them but had a one track mind.

“The Reserve Bank appeared to be supporting Government Policy decisions to lock down and restrict the economy rather than pursuing price stability. It should have been setting interest rates to maintain stable prices, instead it was effectively subsidising lockdowns, allowing the Government to borrow cheaply.

“Now we are paying the price of the Reserve Bank’s folly. Asset prices went through the roof. Inflation is now out of control. The Reserve Bank is now chasing inflation from behind, and that means much higher interest rates than we would have had with sensible monetary policy.

“The Reserve Bank’s review of policy is a giant mea culpa wrapped up in defensiveness and excuses, as has sadly become the norm from the Bank under Adrian Orr."

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