On the Tiles: What would a monetary policy review mean for the Reserve Bank?

Reserve Bank Governor Adrian Orr. Photo / Mark Mitchell

Calls for an independent review of Reserve Bank policy could be a sneaky way for Opposition parties to keep pressure on the Finance Minister ahead of next year's election.

Earlier this week, former Reserve Bank Governor Graeme Wheeler and Bryce Wilkinson for the New Zealand Initiative released a report critical of the Reserve Bank's policies at the start of the Covid-19.

While they did not directly attack the RBNZ, their report was critical of loose monetary policy and quantitative easing that occurred, which they argue has been the primary driver of inflation.

It suggests the RBNZ lost its focus on price stability and took on too many mandates.

Reserve Bank Governor Adrian Orr acknowledged that monetary policy has played a part in the country's very high inflation rate, and said the report would be considered as part of a review.

However, this prompted calls from National Party leader Christopher Luxon for an independent report into the bank.

"What you don't want is the Reserve Bank grading its own homework and doing its own performance review. You need it to be independent," Luxon told the Herald.

On this week's episode of On the Tiles, the New Zealand Herald's politics podcast, senior political correspondent Thomas Coughlan is joined by Wellington Business Editor Jenée Tibshraeny to discuss these calls.

Both agree it is in the Opposition's best interest to keep these calls going, particularly as inflation is so high, as it adds pressure on the Government ahead of the 2023 election - and a potentially critical independent review would fuel that further.

And, while the Reserve Bank is technically separate from Government, the panel discusses how calls for a review are subtly an attempt to put the focus on Finance Minister Grant Robertson, who did have to sign off some of those policies.

• On the Tiles is available on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.

• You can find more New Zealand Herald podcasts at nzherald.co.nz/podcasts or on iHeartRadio.