Did the RBNZ’s Covid-19 response follow a misdiagnosis of the problem?

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By Gareth Vaughan

Reserve Bank’s response to Covid-19 pandemic followed misdiagnosis of problem, and we should use survey to develop plan for handling future challenges, says Opportunity Party (TOP) leader , Raf Manji.

Speaking on interest.co.nz Podcast of interest, Manji says any inquiry into the Reserve Bank’s response to the Covid-19 pandemic should be as apolitical as possible.

“Look at what we did, could we have done things differently, what were the impacts of what we did, and could we have changed that response at an earlier stage? And I clearly think the response to that is yes”, says Manji. .

“One of the first points of attention was the misdiagnosis of what was going on. And I think for me, when I come back, and it’s important that we all reflect on what we said to the I was very, very clear at the time that it was a liquidity crisis. It wasn’t particularly a credit crisis, it wasn’t a recession or a business cycle depression, but that’s how it is. that she was being treated.

In terms of quantitative easing, or the Reserve Bank buying tens of billions of dollars of government and local bonds in the secondary market from banks, Manji says he would have preferred the Treasury and the Reserve Bank to deal directly with each other rather than “providing huge profits to the banks”.

“New Zealand’s problem, which is still our problem, is the huge focus on the property market and the impact that’s having. And there’s no doubt that probably whatever data you look at, probably a third of our inflationary impulse came from the real estate market and the effects that come with that, renovations, capacity compression and the extraordinary rise in real estate prices,” says Manji.

“I think if the Reserve Bank had looked a little more carefully at the results of its policy towards the end of 2020, they might have said ‘okay everyone, let’s get into a room, what happened? happened here, do we need to change our policy’?”

“We are in a position that could have been avoided to some extent,” Manji says.

In the podcast, Manji also talks in-depth about interest rates, inflation, public debt, overt monetary financing, the government’s fiscal policy response to Covid-19 and more.

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