12 Sep 2009

Labour considering changes to Reserve Bank role

11:25 am on 12 September 2009

The Labour Party is considering changing the Reserve Bank's role by moving it away from a narrow focus on controlling inflation.

At Labour's annual conference in Rotorua on Saturday, some delegates at a workshop on economic policy argued for the bank to be brought back under the direct control of the Government.

But removing the bank's independence did not get universal support from delegates.

However, Radio New Zealand's political editor says there is a growing sentiment within Labour that the rules governing the bank's operations need to change.

Finance spokesperson David Cunliffe says making inflation the single target of the Reserve Bank might no longer be appropriate.

Mr Cunliffe said Labour is actively considering changing monetary policy so the bank also has to take account of economic growth, employment and the export sector when setting interest rates.

Radio New Zealand's political editor says Labour is not likely to finalise its policy until at least late next year.

Focus on inflation questioned

Earlier, party president Andrew Little signalled Labour's economic policy should look beyond the control of inflation.

Mr Little on Friday night addressed the first annual conference of the party since he took over as president earlier this year.

He told members on Friday night that Labour must reshape itself and come up with new ideas for the 2011 election.

Mr Little said New Zealand's attempts to control inflation have led to unprecedented volatility in the exchange rate, at the expense of exporters.

He said the idea that "the only thing that matters" in the economy is control of inflation, "has surely had its day."

Mr Little also took aim at the media, questioning the balance of media commentary.