Official Cash Rate decisions should be made by the Reserve Bank Board rather than just a single Governor according to the New Zealand Manufacturers and Exporters Association (NZMEA). Rod Carr’s appointment to the Board yesterday is an excellent one and experience like his needs to be utilised before the RBNZ makes its decisions.
NZMEA Chief Executive John Walley says, “It is great to see someone with experience in the real economy involved at the Reserve Bank. Carr has seen the impact of inflation targeting with interest rates on high margin businesses like software and education chasing offshore markets.”
“The Governor system means that one person is left to make a decision which impacts a diverse group of sectors. It would make sense to have a Board that could include members from a range of backgrounds, like Rod Carr, to ensure better informed decisions.”
“It is also worth noting that a person that has the skills to lead an organisation to supervise financial institutions may not be as good at determining the economy wide impacts that monetary policy has.”
“There are a number changes occurring in monetary policy at the moment with many countries adopting a more export sensitive approach. It is important that we have the right structure in place to make those decisions.”