KEY POINTS:
New Zealand First has failed in a bid to force the Reserve Bank to take into account the exchange rate and other economic factors when it considers interest rates - but the party will try again to press for change.
As the New Zealand dollar continued to hover around post-float highs yesterday, NZ First leader Winston Peters called for a change to the official "primary function" of the Reserve Bank.
The act which governs the bank states that its primary function is to formulate and implement monetary policy, and it also mentions the goal of price stability.
Reserve Bank Governor Alan Bollard has raised interest rates several times, but inflation remains persistent and the currency is soaring and hurting exporters.
Mr Peters wants the bank to be directed to consider the exchange rate, export and economic growth, and employment, so that it maintains price stability while also promoting the overall prosperity and wellbeing of all New Zealanders.
In a surprise move yesterday NZ First MP Doug Woolerton sought leave from the House at the end of Parliament's question time to introduce a bill which would make those changes.
But the move was opposed by National Party deputy leader Bill English, and failed.
It is understood NZ First is likely to try again to introduce the bill, and will also put the bill into a member's ballot in the hope it will be drawn out for consideration.
Mr Peters called on other parties to back the bill, to address what he described as a "flaw" in existing monetary policy.
"We cannot go on operating under the flawed ideas of an imported system which was never designed for an economy such as ours," he said.
It is doubtful that NZ First's attempt at change will get enough political support to go far, although a select committee is currently examining issues around monetary policy and could potentially consider it.
National Party leader John Key said yesterday that the Government had already had an opportunity to consider changing rules around the Reserve Bank's operation, but elected not to when it reappointed Dr Bollard.
"What we know is that there is no easy solution," Mr Key said. "My personal view is that monetary policy will work if you give it the chance, and I think you're already starting to see signs of that."
