Taxpayers’ Union welcomes review of Reserve Bank’s COVID-era actions

Responding to the Minister of Finance’s announcement today of an independent review into COVID-19 monetary policy, Taxpayers’ Union spokesperson James Ross said the review is “long overdue”.

“The Reserve Bank pumped far too much money into the economy. The result was a surge in asset prices and the kind of inflation that has hammered households ever since.”

“When the Bank finally realised it had let the inflation genie out of the bottle, it responded with sharp rises in the Official Cash Rate. That response tipped the economy into recession: a recession the former Governor, Adrian Orr, quite publicly said was necessary.”

“But the downturn has been deeper and longer than even he appears to have anticipated.”

“A searching investigation into how the Reserve Bank assessed the situation, and how it reached its decisions, is desperately needed. The review must examine the apparent lack of coordination between monetary and fiscal policy, and recommend corrective action.”

“It also needs to scrutinise the Bank’s use of ‘alternative’ tools, including the scale, timing, and duration of those interventions.”

“The Bank brutalised the New Zealand economy to correct its own mistakes. New Zealanders are still living with the consequences of the worst Bank-induced recession in more than thirty years.”

“This cannot be a once-over-lightly desktop exercise. It must be a forensic examination that produces a practical blueprint to prevent a repeat of this economic disaster. The public deserve nothing less.”

“The review should also have the full legal powers of a government inquiry. Decision makers should be required to give evidence under oath and in public. These decisions had major, real-world impacts on New Zealanders’ lives, and transparency demands it.”