New RBNZ governor an opportunity for modern monetary policy

The appointment of Graeme Wheeler as the new Governor of the Reserve Bank is an opportunity for the Government to adopt a modern monetary policy, Green Party Co-leader Russel Norman said today.

"The Reserve Bank's one-tool toolkit is plainly inadequate for the economic reality we live in", said Dr Norman.

"Currently, the Reserve Bank faces a dilemma. If it cuts interest rates, it risks another housing bubble. Instead, it has done nothing, which causes a high exchange rate, hurting exporters and domestic producers.

"The negotiation of a new Policy Targets Agreement between Mr Wheeler and the Finance Minister is an opportunity to give the Reserve Bank a broader mandate and a wider range of tools.

"The Greens have outlined a range of possible tools the Reserve Bank could use, such as loan to value ratios. A debate on which tools are best suited for New Zealand's needs is urgently required.

"The appointment of a new Reserve Bank Governor is the time for that debate," said Dr Norman.