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Central bankers in another world

07/04/2020

This was a most interesting post from Michael Reddell. The post looks at several issues which we are faced with as a result of the present health and resulting economic crisis.
I was particularly struck by this paragraph:
‘But today I wanted to focus on the Reserve Bank again: two lots of comments in recent days from the Governor, and one from the Bank’s chief economist (who is appointed by the Minister of Finance to serve on the Monetary Policy Committee). None of it is reassuring.’
This post raises several important issues

croaking cassandra

The government’s economic policy, such as it is, in response to the coronavirus situation has the distinct feel of inadequacy.  Hamish Rutherford did a big piece late last week on the Minister of Finance, but interesting as it was what was most notable was the utter absence of any overarching narrative or strategy.    Of course, we have the wage subsidies –  now apparently being paid in respect ofmore than a third of the entire employed population – but that is about it.   There is the business loan guarantee scheme, and although time will tell I suspect that won’t be very much used (not many businesses will sensibly support much more debt).   There is much talk of special deals for favoured big firms, but Air New Zealand (first round) aside we’ve seen nothing more on that front.  And more generally there is no sign of anything systematic to…

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