Review of RBNZ to Consider Critical Report, Gov. Orr Says

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By Stephen Wright

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WELLINGTON, New Zealand–A think tank’s report that blames central banks for overdoing stimulus in response to the Covid-19 pandemic will be considered as part of the current review of the Reserve Bank of New Zealand, Gov. Adrian Orr said Tuesday.

New Zealand’s inflation rate—at 7.3% in the second quarter—is above the RBNZ’s 1.0%-3.0% target band and decisions in recent years by the central bank’s monetary policy committee have influenced that outcome, Mr. Orr said.

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Issues that have concerned the RBNZ such as climate change and incorporating an indigenous Maori world view–but which aren’t part of the bank’s central mandate–haven’t distracted the policy committee from its job, he said.

The New Zealand Initiative think tank on Tuesday released a report that said central banks had made mistakes that led to inflation far exceeding their policy targets.

Former RBNZ Gov. Graeme Wheeler was an author of the report, which said that central banks were overconfident, too slow to withdraw stimulus and in some cases less effective because they had strayed from a singular focus on inflation.

“We are a learning institution, and through the open process of the [Monetary Policy] Remit review and the monetary policy review, we will be very clear on our lessons learn,” Mr. Orr said.

The review of the RBNZ will provide recommendations to the government.

Write to Stephen Wright at [email protected]

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Credit: www.marketwatch.com /

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