Goff announces end to monetary policy consensus

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Labour can no longer support the long-standing political consensus on monetary policy, leader Phil Goff has announced.

Speaking to a Federated Farmers conference today, Mr Goff said the battle against inflation should no longer be the sole priority - growth and wealth creation were just as important.

"For 20 years since the Reserve Bank Act was passed, there has been a bipartisan consensus between National and Labour over the policy targets and the primacy of price stability.

"The consensus between us continues on the independence of the Bank. But today I am announcing the end of the consensus around the policy targets and tools of the reserve Bank."

Mr Goff said he wanted policy that would keep New Zealand's exchange rate as stable and competitive as possible.

"We want to reduce interest rates for businesses and home-owners, so that we put more money into the pockets of New Zealanders."

Price stability and low inflation would still need to be important objectives for the bank but "we need to guard against people locking in higher expectations of price rises".

"The way they interact with other objectives will be an important part of our economic policy at the next election."
Even the Reserve Bank was starting to ask questions about the adequacy of its tools, Mr Goff said.

"The system we have causes widespread damage to the tradable sector. This is an important policy area for farmers and the performance of our economy overall."

- © Fairfax NZ News