RBNZ Blasted for Pandemic Rate Hike Delay
The Reserve Bank of New Zealand has been criticized for being 'too slow' to lift interest rates during the pandemic, according to a review released by former Reserve Bank assistant governor David Archer and MIT professor Athanasios Orphanides.
The review found that the bank held interest rates at record lows for too long, driving inflation to record highs and triggering a boom-bust cycle that is still affecting the country. The economy 'overheated to an historically extreme degree', according to the report's findings.
Finance Minister Nicola Willis said the review showed the bank was 'too slow to take its foot off the accelerator' between 2020 and 2021, and she expects the bank to consider the recommendations carefully. However, Labour has questioned the timing of the review, which was released just six weeks before the election.
The reviewers praised the bank's early crisis response but criticized its decision to broaden its mandate to include supporting maximum sustainable employment, which they said downplayed the importance of price stability.