24 Jun 2013

Economist has reservations on interest rate proposal

1:37 pm on 24 June 2013

An economist is calling for more debate on using a board to set interest rates but warns it could risk the Reserve Bank's independence.

The Green Party is pushing for the Reserve Bank Board make monetary policy rather than its governor, saying it would make decisions more transparent and represent the wider economy.

Institute of Economic Research senior economist Dr Kirdan Lees says groups tend to make better decisions than individuals.

But he says the Reserve Bank already consults widely before each monetary policy decision, and an internal governing group also assists with decision making.

Dr Lees adds that including exporters and manufacturers on a board risks changing the aims of monetary policy from targeting inflation to promoting exports.