NZ’s Robertson Says Dual Mandate Didn’t Change RBNZ Decisions

(Bloomberg) — New Zealand Finance Minister Grant Robertson has defended the central bank’s dual mandate as “normal” and not something that’s caused inflation or interest rates to be unnecessarily high.

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“Adrian has said very clearly that the decisions he’s made since we changed the mandate, in particular in the last few years, have not been affected by the fact that he had the dual mandate,” Robertson said at an event Tuesday in Wellington, referring to Reserve Bank Governor Adrian Orr. “He would’ve made the same decision with or without the dual mandate.”

Robertson introduced employment as a second mandate alongside price stability in 2018. The central bank started raising interest rates in late 2021 as inflation began accelerating, at the same time saying employment had got above maximum sustainable levels. It has signaled it has completed its hikes and expects inflation to return to its 1-3% target range next year from 6% currently.

“The Bank of England, the Federal Reserve in the US, the RBA all have forms of mixed mandates,” Robertson said. “It’s completely normal and in line with the way that monetary policy has evolved over the years.”

Robertson was speaking on a panel of political party finance spokespeople ahead of the Oct. 14 election. The main opposition National Party has pledged to return the RBNZ to a single inflation mandate if it wins, saying this would help to overcome the cost-of-living crisis.

Curbing inflation “starts with getting the Reserve Bank back to a single mandate,” National finance spokesperson Nicola Willis said. “That’s the convention. That’s the right thing for them to be focused on, inflation busting.”

New Zealand Opposition Eyes Quick Change to RBNZ’s Mandate

Willis said governments need to get their spending under control and avoid adding extra costs to businesses through regulation and red tape.

“Increasing spending has undoubtedly put pressure on inflation and interest rates,” she said. “This is a government that has consistently spent more than it said it would and that has undoubtedly fueled inflation.”

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