\u201cIt\u2019s a debate and a discussion that does need to be had,\u201d Edmonds said.<\/p>\n
\u201cI\u2019d be open to hearing from other economists as to what they think,\u201d she said. <\/p>\n
\u201cThere is going to be different parts of the argument that different economists bring up… ultimately the discussion is going to happen and I am going to be listening intently as to where people think we should fall and balancing that up.\u201d <\/p>\n
Hours later, on his way into the House, Hipkins was asked whether Labour was opening the door to a higher inflation target. He said that was a \u201cmassive misrepresentation of what Barb has said\u201d.<\/p>\n
\u201cShe said that she was open to having a discussion about what would be the correct inflation target for the Reserve Bank.<\/p>\n
\u201cA finance spokesperson saying that they\u2019re interested in hearing from economists is a finance spokesperson being a good finance spokesperson,\u201d Hipkins said. <\/p>\n
\u201cWe certainly haven\u2019t indicated that the Labour Party is reviewing this particular part of our policies.\u201d<\/p>\n
Asked about ruling out a higher inflation target, Hipkins said, \u201cthat is not something that we are considering\u201d.<\/p>\n
The discussion was begun after Eckhold published a report saying a new target \u201cmight better match NZ\u2019s historical capacity to deliver price stability and bring expectations closer to reality\u201d.<\/p>\n
\u201cRaising the mid-point of the inflation target would need to be matched with increased focus on the MPC to ensure the future average inflation rate doesn\u2019t drift higher with the target midpoint,\u201d he said.<\/p>\n
Arthur Grimes, a former Reserve Bank chair and chief economist who is credited as one of the main architects of the inflation targeting model, told TVNZ\u2019s Q+A with Jack Tame lifting the target to 2.5% was a \u201cludicrous point of view\u201d.<\/p>\n
Grimes said it was \u201crubbish\u201d to say that hitting a 2% mid-point was difficult for the Bank to achieve.<\/p>\n
\u201cIn the last five years the Reserve Bank has obviously inflated a lot under the previous governor, but before that inflation averaged 1.6% for over a decade.<\/p>\n
\u201cThe idea [the target] needs to be raised is ludicrous,\u201d he said.<\/p>\n
Independent economist Cameron Bagrie, in a column for BusinessDesk (owned by Herald publisher NZME) pondered both sides of the debate.<\/p>\n
\u201cSome say we need stricter inflation targets. Inflation robs purchasing power. <\/p>\n
\u201cIt creates price dispersion, tax system distortions, and distributional impacts. Society does not like inflation now that it has recently experienced it.<\/p>\n
\u201cMore recent literature has focused on whether the inflation targets need to be higher. Arguments include downward nominal wage rigidity; inflation can help the economy\u2019s adjustment process through real wage movements, but workers may not appreciate this,\u201d Bagrie said. <\/p>\n","protected":false},"excerpt":{"rendered":"\u201cIt\u2019s a debate and a discussion that does need to be had,\u201d Edmonds said. \u201cI\u2019d be open to…\n","protected":false},"author":2,"featured_media":11006,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[1443,74,3115,1643,13485,10141,138,3276,13487,13482,6097,13488,219,13486,13492,246,266,305,13484,13480,13490,13481,13493,9641,78,1943,12469,6721,13489,2250,6722,111,139,69,90,13491,10665,8225,13483,5977,102,6730],"class_list":["post-11005","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-about","tag-after","tag-allowing","tag-bank","tag-barbara","tag-begun","tag-business","tag-chris","tag-discussing","tag-discussion","tag-down","tag-economists","tag-economy","tag-edmonds","tag-effect","tag-finance","tag-government","tag-have","tag-higher","tag-hipkins","tag-hosed","tag-hoses","tag-hotter","tag-idea","tag-in","tag-inflation","tag-interest","tag-labour","tag-leader","tag-longer","tag-minister","tag-new-zealand","tag-newzealand","tag-nz","tag-on","tag-probably","tag-reserve","tag-target","tag-tolerating","tag-which","tag-with","tag-would"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/11005","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=11005"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/11005\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/11006"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=11005"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=11005"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=11005"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}