Getting monetary policy mix right
Monetary policy has been in the spotlight again of late as the search for the optimum monetary policy strategy to balance short-term interest rates and inflation against volatility in the exchange, rate draws comment from economists.
This week's ANZ/National Bank Market Focus hones in on comments made by Treasury officials in a paper to the Minister of Finance released last week.
The paper suggests that tighter fiscal policy could provide the ability for monetary policy to stay looser for longer. Cuts in government spending could be expected to see the Official Cash Rate (OCR) remain lower than it might otherwise for several years. This in turn would mean less pressure on the NZ dollar.
"All up, it looks like prepping for a tight Budget and fiscal restraint, which should help the Reserve Bank," the Market Focus report says.
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
