29 Jan 2010

Reserve Bank governor defends monetary policy

8:49 pm on 29 January 2010

The Reserve Bank governor has launched a defence of New Zealand's monetary policy in which he says there are few viable alternatives.

It comes after the Labour Party reiterated on Thursday its intention to break a 20-year consensus between the main political parties.

Labour wants to review monetary policy because it believes it has delivered an uncompetitive exchange rate for exporters.

Reserve Bank governor Alan Bollard says monetary policy has tamed inflation since being introduced in 1989, but failed to create a thriving export sector.

Labour Party finance spokesman David Cunliffe says the central bank is introducing some tools to tackle this, but more are needed.

However, Dr Bollard in his speech on Friday dismissed alternative ideas such as currency union with Australia or using Singapore's system.

He says they will not work in New Zealand and could lead to a more volatile dollar