RBNZ Governor Adrian Orr issued a statement to defend the central bank’s decision to the surprised 50bps rate cut earlier this month. That was a response to an opinion piece of BusinessNZ chief executive Kirk Hope titled: ‘Business concerned by blurring of Government and Reserve Bank policy”. Hope criticized that “last week’s OCR cut was less predictable because it did not seem to relate to current inflation or unemployment data.”

Orr explained that the central banks’ decisions are “forward-looking and transparent”. Also, it’s “operationally independent”, with clear mandates and goals. He emphasized policymakers “cannot, and do not, set the OCR based on current or historical inflation and employment outcomes.” And, “we look ahead – not behind”. He added that “global and domestic low inflation expectations sit as a key reason for lower global and domestic official interest rates.”

 

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