The announcement of Reserve Bank Governor Alan Bollard's
departure has sparked a call for monetary policy change among
economists and analysts.
Allan Bollard yesterday announced he would step down from his
role as the Reserve Bank Governor in September, marking the
end of a decade in the role.
Business and Economic Research Limited (BERL) chief economist
Ganesh Nana told Radio New Zealand Mr Bollard's departure was
an opportunity to shake up the monetary policy.
"The job should not be isolated from the broader role of
managing and governing a sophisticated modern day economy and
unfortunately just focusing on one target for one person
isolates and puts monetary policy in a silo.''
He said the governor needed to be "actively involved'' in all
avenues of economic policy setting.
"The focus needs to be for the whole group, on the prosperity
of the New Zealand economy, and in particular it's
imbalances, whether they be external and internal.''
He said the Government should be involved in, but not drive
or control, the macro economy as it is doing now. The
Government should instead play a stronger role in managing
Mr Nana said the country should look to countries such as
Singapore and Switzerland for inspiration, as the current
practice of controlling inflation before waiting for
everything else to "fall into place'' was not working.
Currency market analyst Derek Rankin suggested a committee of
four or five people to vote on the Official Cash rate, to
take the pressure off a single person, as international
However former Reserve Bank Governor Don Brash said expanding
the role would be a mistake, and the Government should focus
on keeping inflation low.
"I say why would you change something which is clearly
working very well indeed.''
Dr Brash cited low inflation, one of the lowest unemployment
rates in the developed world, and said exchange rate
volatility had been no more pronounced than other countries.
He said the framework had been reviewed last decade at the
request of former Prime Minister and Labour leader Helen
Clark, and it was decided that no changes were necessary.
He said he was glad the Government showed no sign of widening
the role's brief.
Don Brash told Newstalk ZB this morning there is plenty of
local talent to fill Dr Bollard's shoes.
He said he could immediately think of five New Zealanders who
would be admirable replacements, "starting of course with the
Deputy Governor, Grant Spencer.''