Jun 7, 2008

Colin Espiner On The Monetary Policy Statement

Colin Espiner blogged yesterday on the political implications of the Reserve Bank's most recent statement. He highlights the big differences in forecasts between Treasury and the Reserve Bank and makes a rather alarming statement

Personally, my money’s on the Reserve Bank being closer to the mark. Although Bollard’s team is smaller, they seem more disciplined, not to mention more independent, than Treasury. The bank has a more of a weather eye on international events than Treasury, too, and I think more correctly assesses the impact of external events on our economy than Treasury does.

What has happened to Treasury? It didn't used to be like this.

Espiner agrees also with Fran O'Sullivan on the implications for tax cuts

The bank’s verdict also has some good news for National, since it now appears that tax cuts aren’t likely to be inflationary in the medium term after all. Finance spokesman Bill English has already said he feels more comfortable now about National’s tax cuts programme and I think we can expect bolder moves from National than might have otherwise been the case.