ADRIAN ORR our NEW RBNZ GOVERNOR

[Aaron]

Here is another article that mentions that Graeme Wheeler and Grant Spencer were critical. Maybe they might know who best to replace Adrian.

https://www.interest.co.nz/public-po...k-independence

Adrian is so up himself the RBNZ has lost any shred of independence, to quote Bernard Hickey.

By early 2020 when the prospect of near-zero percent interest rates beckoned and the Reserve Bank was looking at its options for alternative monetary policy tools, it was becoming clearer that monetary policy and prudential policy decisions were becoming much more political. Money printing exercises in the United States in particular were seen enriching those with assets and widening inequality, but those debates never took place here.

The assumption was that these alternative tools would be ‘distributionally neutral’, which is true between home-owners, but not between home-owners and renters. We knew that money printing worked as a monetary policy tool by making the wealthy wealthier and hoping they’d spend some of their ‘wealth effect’ to boost the economy.

The $55b of money printing, the removal of the LVRs and the creation of the FLP combined with existing housing shortages and existing tax advantages to thrust house prices 45% higher in 18 months and wipe out another generation of renters hopes for the home ownership they know they need to build healthy and secure futures for their kids.

The Reserve Bank wasn’t just doing monetary policy and prudential policy. It was doing redistributional and social policy, and not in a good way. The lack of self-awareness or contrition was the final straw The Reserve Bank’s decisions essentially added $1 trillion to the wealth of home-owning households and it was clear in public to everyone except the Reserve Bank, Treasury and the Finance Minister’s office.

[kiora]

Grrrr
“I would immediately inquire into the impact monetary policy decision making has had. How much has that money printing added to the bottom line for banks? How much have they benefited from really cheap lending? And how much of that is being passed on?” – Willis.
& then who blames the banks for having excess margins ?
https://thespinoff.co.nz/politics/09...ge-to-politics

[Aaron]

Might have over reacted. All good at the RBNZ according to an internal review.

https://www.nzherald.co.nz/business/...HXAONAAL4QZRE/

Don't have the time to check the views of independent experts Warwick McKibbin, a Professor at the Australian National University, and Lawrence Schembri, former Deputy Governor of the Bank of Canada but imagine like most economists they believe in the financialization of the economy.

[Aaron]

The bank's chief economist Paul Conway also defended the bank's approach to inflation, saying the bank would have needed perfect foresight to have been able to have kept annual inflation within the target range of 1 to 2 percent right now.

https://www.msn.com/en-nz/news/natio...46f0da6b7c09d3

Golly gee whiz Paul I am not smart nor an expert on monetary policy but still I suspect the RBNZ more than doubling its balance sheet in one year between 2020 and 2021 might have played some part in the current inflation issue.

This does not take into account ridiculously low interest rates. From memory the forecast was a 10% drop in house prices pre lockdown. So the RBNZ saved us from this by pushing up house prices I don't recall just how much but enough to lock the next generation out of the housing market and causing desperate first home buyers to mortgage themselves to the hilt to get on the property ladder and they now face something much worse than a 10% fall.

A path of least regrets indeed. A path for a weak leader incapable of doing the job he was asked to do. You don't need an independent review you need to find someone capable to take over.

Bernard remembers 45% increase in house prices over 18 months.

https://www.msn.com/en-nz/news/natio...196c4f34f9fe71

[Ferg]

Golly gee whiz Paul I am not smart nor an expert on monetary policy but still I suspect the RBNZ more than doubling its balance sheet in one year between 2020 and 2021 might have played some part in the current inflation issue.

I find it staggering Orr has the gall to blame Putin for our inflation. Economics 101: if you print a lot more money (which they did) then you increase inflation (which it has). To say the inflation is imported is spin, damned spin and lies.

[ynot]

I find it staggering Orr has the gall to blame Putin for our inflation. Economics 101: if you print a lot more money (which they did) then you increase inflation (which it has). To say the inflation is imported is spin, damned spin and lies.

It appears anything is possible in our banana republic these days. And to think we pay him $800k pa for the privilege of his wisdom.

[JBmurc]

It appears anything is possible in our banana republic these days. And to think we pay him $800k pa for the privilege of his wisdom.

All by design >> sadly ... certainly a LOT of very pissed off kiwis with are present administration ... I wouldn't think mr Orr could walk the streets without getting heckled rotten eggs thrown at him .. the whole we will keep rates low till least 2024 to help businesses/households from COVID affects ... to wow we got inflation lets jack rates 100% less than a year and now add another 100% in the ST ... that will help out suffering kiwis ...

[stoploss]

I find it staggering Orr has the gall to blame Putin for our inflation. Economics 101: if you print a lot more money (which they did) then you increase inflation (which it has). To say the inflation is imported is spin, damned spin and lies.

It would appear inflation was already out of the bag ahead of the Russian invasion …..
https://www.stuff.co.nz/business/opi...eserve-bank-is

[Aaron]

Just another article suggesting Adrian may not have done a good job with his path of least regrets approach.

https://www.nzherald.co.nz/business/...NAZ25VPA2S5TU/

To quote from the article.

as early as October 2020, the likes of former Reserve Bank chairman Arthur Grimes was ringing the alarm bells over house price inflation, and how very loose monetary policy was "destabilising asset prices".

Nonetheless, by November 2020, the Reserve Bank announced it would launch its second money printing programme, through which it would lend banks money cheaply to help them keep mortgage and term deposit rates low.
By this point, the Reserve Bank knew the REINZ's house price index had gone up by 6.2 per cent in the three months to September, and 11.1 per cent in the year to September.
It had already cut the Official Cash Rate (OCR) by 75 points to a record low of 0.25 per cent and printed $40b to buy bonds via its Large-Scale Asset Purchase (LSAP) programme.

By February 2021, Grimes said the Reserve Bank should start tightening monetary policy. By July 2021, he claimed the Government and Reserve Bank had engineered a "wellbeing disaster".

When quizzed about the housing market, Governor Adrian Orr has tended to argue it isn't the Reserve Bank's job to target house prices.

He also said the RBNZ only plays a "bit" part in the value of housing in NZ and he has mentioned the wealth effect he was trying to create, so the message he gives appears inconsistent or wrong.

I think the real reason he got it so wrong is that since 2008/09 central banks have gone crazy but they only seemed to inflate asset prices without affecting CPI. Adrian probably thought he could carry that on with few regrets, especially as he earns $800k a year and no doubt was comfortable with his house prices rising.

Not surprised Labour does not want an enquiry into the well being disaster they helped to create. It might start with the profits the banks are making.

[Aaron]

Ganesh Nana from the Productivity Commission might be onto something.

https://www.interest.co.nz/public-po...nd-needs-major

Lets not just rely on more people to pump GDP but discuss the idea of holding a referendum on the population size we want.

I think we've got an opportunity to set our own path, and our own trajectory in terms of population, in terms of migration and population growth. Let's do that openly and explicitly rather than stumble into the rather large population growth we had pre-Covid."

Amazing how quickly that turns into a labour shortage. Either the wrong people are coming in or the RBNZ overstimulated the economy or maybe a bit of both.