RBNZ Slammed for Slow Response to Pandemic-Era Stimulus

A review of the Reserve Bank of New Zealand's (RBNZ) handling of the Covid-19 pandemic has found that the bank kept stimulus measures in place too long, contributing to higher inflation.

The independent report, which revisited how the RBNZ responded to the economic shock, backed the early 'least-regrets' playbook of moving quickly with large-scale asset purchases to stabilize the economy. However, it stated that the rebound proved stronger than expected and that it took a full year for policy to adjust once the stimulus had already done its job.

The report recommends that the RBNZ adopt a more disciplined framework in its decision-making process, focusing on known vulnerabilities and using scenario analysis more heavily. It also suggests that the bank give greater weight to near-term inflation data and real interest rates when making decisions.