Labour’s pledge to reinstate the Reserve Bank’s dual mandate only risks worsening the cost of living
The NZ Herald argues that the Labour Party's proposal to reinstate the Reserve Bank's dual mandate could negatively impact inflation control. The article suggests that focusing on employment alongside inflation may distract from the bank's primary goal of maintaining price stability.
Why it matters
Monetary policy mandates directly influence interest rates and the cost of living for citizens, making this a central issue in New Zealand's economic policy debate.
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Labour's Chris Hipkins and Barbara Edmonds, backed by Carmel Sepuloni and Willie Jackson, who are campaigning on reintroducing the Reserve Bank's dual mandate. Photo / Sylvie Whinray
New Zealanders have little to gain and much to lose from Labour playing politics with the Reserve Bank by campaigning on reinstating its dual mandate.
Labour yesterday confirmed that if elected to govern, it would require the Reserve Bank’s Monetary Policy Committee (MPC) to maintain “maximum sustainable employment” in addition to keeping the annual inflation rate between 1 and 3%.
Former Labour Finance Minister Grant Robertson introduced the dual mandate in 2018. His successor, Nicola Willis, then removed it in 2023, requiring the committee to once again simply target inflation.
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