New Zealand has acute “learning disability”

Having the RBA so close by and experiencing the same sort of shocks, why doesn´t the RBNZ learn more from the RBA to do a better job of managing monetary policy?

In March I wrote “Lessons from Australia” in which I showed this chart, illustrating how much better monetary policy is in Australia.

Learning Disability

Now take a look at recent news on the two countries:

New Zealand:

WELLINGTON, New Zealand—The New Zealand dollar fell Wednesday after the country’s central bank said it may intervene to weaken it, but the bank’s plan to continue raising interest rates will make engineering a decline in the currency a challenge over the long term.

Australia:

Australian employers boosted payrolls in April, underscoring an improving economic outlook that prompted the central bank to adopt a neutral policy stance.

Central bank Governor Glenn Stevensreduced the benchmark interest rate by 2.25 percentage points from late 2011 to August to a record-low 2.5 percent, and has signaled a period of steady borrowing costs. The jobs data and a stronger housing market indicate businesses are beginning to invest in an economy that policy makers predict will accelerate.

Is the differential performance of the two countries surprising?

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.