‘We want New Zealanders to be in work and be paid well’

Finance Minister Grant Robertson has started the ball rolling to change monetary policy so the Reserve Bank has to take employment into account when setting the official cash rate.

He has also re-signed the current policy agreement which sets inflation targets, to give financial markets some certainty.

At the moment the Reserve Bank has a target of keeping inflation between one and three percent when setting the official cash rate, which then influences bank interest rates.

In their coalition agreement Labour and New Zealand First agreed on a review to give the Bank a broader focus, namely maximising employment].

Mr Robertson said that will sit alongside inflation targets, but there would not a numerical target set on employment rates.

“It’s core to this government that we want New Zealanders to be in work and to be paid well for the work that they are in, that’s the focus I’ve taken into this and I think it’s important that we follow through.”

These changes were not about the government wanting more control over the Reserve Bank, he said.

“The operational importance of the Bank is very important and we want to protect that, what this is about is being clear about the objectives we have for monetary policy.” There will be a two-phase review.

The first will look at how best to implement the new employment requirement, and provide for a committee to make decisions about monetary policy.

Read more at: http://www.radionz.co.nz/news/business/343259/we-want-new-zealanders-to-be-in-work-and-tobe-paid-well