RT @JoshBBornstein: 65 year study confirms my research: Tax cuts don't lead to economic growth. Ping @Nick_Xenophon , @BCAcomau https://t.…
19/08/2017 9:13 PM
RT @attn: .@Schwarzenegger has a blunt message for Nazis. https://t.co/HAbnejahtl
18/08/2017 9:38 PM
RT @PositiveMoneyUK: Make Monetary Policy Fair: It's time to explore alternatives to 'conventional' QE. https://t.co/m6CFVojm7w #QEforPeopl…
18/08/2017 9:35 PM
@deirdrekent To be expected when income is taxed and capital gain not...
16/08/2017 9:22 PM
@bernardchickey @YourHomeLoanNZ Add ring fencing loses / deal to negative gearing and we might see some balance develop in the economy.
16/08/2017 7:36 PM
@bernardchickey Or take the job and do the right thing anyway - the RBNZ is "independent" after all...
16/08/2017 7:34 PM
@bernardchickey Not take the job because you would know you would be on a hiding to nothing. The link between earn… https://t.co/nxPRuAaT6t
16/08/2017 7:31 PM
RT @theyearofelan: Sure, the cancer was aggressive. But the chemotherapy was also very aggressive. There was aggression on both sides
16/08/2017 7:27 PM
@bernardchickey DTI+LVR+OCR all needed for financial stability & inflation.RBNZ can then push back on dumb policy f… https://t.co/CqXISZUHGq
16/08/2017 7:27 PM
@SelwynPellett Farming capital gains makes it hard to pay current expenses hence the need to externalise costs. Th… https://t.co/J1yevZAHft
14/08/2017 5:46 PM
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27
JUL 10

OCR Neutral at 5%?




http://www.interest.co.nz/opinion/opinion-why-moving-ocr-5-wont-hurt-our-economic-recovery

I think the strange notion of a fixed “neutral” rate was pretty much dealt to on the thread.


Taking an overview might be worth a minute. Yes we need to resist inflation, yes we need a currency that reflects trade performance for any persistent economic rebalancing – the OCR simply cannot deliver that outcome: one or the other but not both.


Headline inflation has been restrained by the OCR at the cost of decimating the external sector, domestic inflation remained outside the policy band up to the point when most recognised the global financial crisis was in full swing, only at that point did the domestic inflationary pressure fall.


The OCR alone is not up to the task – that is clearly the new normal. More policy options are necessary.


Lots of discussion goes on here on what those options might be but those in power need to get on to the case – there is not much time.
 


tags: ocr, economic recovery, neutral rate
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