Reserve Bank of New Zealand Governor Graeme Wheeler should be forced to set monetary policy together with the bank’s board, which should include representatives from the export and manufacturing industries, the opposition Green Party said in a statement in Wellington today. It also proposed that the board publish minutes of its rate discussions within two weeks.
“No other country in the OECD gives full responsibility for the cash-rate decision to one person,” Greens co-leader Russel Norman said. “This is antiquated. It leads to poorer decisions, decisions which don’t reflect the wider economic interests at stake when the official cash rate is set.”
Under existing law, New Zealand’s central bank governor makes the final decision on interest rates after taking advice from officials who don’t vote and whose deliberations aren’t released publicly. The Greens are preparing a Members Bill on the proposal, which may be drawn from a ballot and debated in parliament.
The opposition, comprising the Green, Labour, New Zealand First and Mana parties, have 56 votes in the 120-seat parliament while the National Party forms the government with control of 64 votes.
The opposition parties trail in opinion polls ahead of an election which must be held by the end of 2014. If they can form a government, the Greens will ensure the Reserve Bank board has membership from exporting and manufacturing industries so its decisions represent the broader economy, Norman said today.
“This draft bill will bring the Reserve Bank into the 21st Century,” he said. “The U.K., U.S. and Australian central banks all publish their minutes. Increased transparency will result in stronger financial markets making them less prone to shocks.”
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