THE RESERVE BANK: “They’re completely to blame for allowing this to happen… They’ve been incompetent, they’ve been really incompetent”

"It’s ordinary people who are suffering the most from the current cost of living crisis. In other words, working people and the poor are paying the price of higher prices....
    "It’s only natural to ask what has caused this situation.... leaders have made incompetent and self-serving decisions that are causing global problems, and contributing to our own local cost of living crisis. But that doesn’t let local decision-makers off the hook.
    "Although few politicians or even economists want to acknowledge it, the decision to launch massive Covid stimulus spending has played a central role in the current crisis around the world, including New Zealand. Politicians and central banks unleashed a flood of money, but the stimulus primarily drove increases in asset values, thereby making inequality even worse. The K-shaped recovery enriched the already-wealthy, while those without large assets to begin with – houses, share portfolios and so on – are left to struggle with the consequences of inflation....
    "[P]oliticians and the central banks targeted this spending in ways that advantaged the rich, and continued to pour money into those economies well after the Covid economic crisis was stabilised. Similarly, the Government’s Wage Subsidy Scheme was set up to meet genuine need, but poor design saw much of the $20bn flow into the bank accounts of the rich....
    "Economist Arthur Grimes has been scathing today about what has led to current inflation levels and the cost of living crisis. Grimes has been both Reserve Bank chairperson and its chief economist, and he’s also credited with creating the innovative practice of “inflation targeting” in the 1980s, which helped get inflation down near zero. What he says carries a lot of weight.
    "Grimes has not minced his words about the Reserve Bank: 'They’re completely to blame for allowing this to happen… They’ve been incompetent, they’ve been really incompetent.' And he’s been reported by Thomas Manch as believing “with better management, New Zealand could’ve had inflation akin to Switzerland, at 2.9%, or Japan, at 2.1%.' ... Grimes’ explanation for the domestic inflation disaster [is that] 'the Reserve Bank had "misread the conditions" of the Covid-19 pandemic and in the past three years, it had loosened monetary policy too much, causing a massive increase in asset prices, and cut the official cash rate "more than they should have".' ...
     "[O]rdinary people will now suffer."

~ Bryce Edwards, from his post 'How much of our cost-of-living crisis is due to incompetence?'