MNI BRIEF: RBNZ Would Have Needed 'Perfect Foresight' - Conway
Reserve Bank of New Zealand chief economist Paul Conway said Thursday policymakers would have needed "perfect foresight" and the official cash rate would have to have been raised "almost" 7% during the peak of the pandemic to have inflation within its 1% to 3% target band, as he respnded to an internal review that said policy should have been tightened earlier in 2021. (MNI BRIEF: RBNZ Should Have Tightened Earlier - Bank Review)
"(The RBNZ) would have had to increased the OCR to almost 7% a couple of years back when New Zealand was in the thick of a global pandemic with all of the economic turmoil hat would have been unleashed by such an unrealistic decision. This is clearly an implausible scenario," he said.
Conway said such as move would have been "inconsistent" with the inflation targeting remit of he monetary policy committee had it even been possible.