Don’t shoot until you see the whites of their, Ah, screw it! cut! Cut! CUT!
The Reserve Bank of New Zealand cut interest rates by 0.5% on Wednesday 7th August 2019. The equal biggest cut since the Great Recession in 2009! Clearly the New Zealand economy is going badly and things are expected to get much worse, right? Not according to the latest data on the Reserve Bank’s goals of employment and inflation. Instead the Reserve Bank is acting to head off potential bad future outcomes that it’s own forecasts do not think will happen. Setting monetary policy in direct conflict with your own evidence and expectations does not seem like a solid basis for good monetary policy.
Jumping at Shadows: The Reserve Bank of New Zealand’s 0.5% rate cut.
Don’t shoot until you see the whites of their, Ah, screw it! cut! Cut! CUT!
The Reserve Bank of New Zealand cut interest rates by 0.5% on Wednesday 7th August 2019. The equal biggest cut since the Great Recession in 2009! Clearly the New Zealand economy is going badly and things are expected to get much worse, right? Not according to the latest data on the Reserve Bank’s goals of employment and inflation. Instead the Reserve Bank is acting to head off potential bad future outcomes that it’s own forecasts do not think will happen. Setting monetary policy in direct conflict with your own evidence and expectations does not seem like a solid basis for good monetary policy.