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ROB MacCULLOCH: Did the Reserve Bank massage its OCR forecasts to help Labour keep power? (we've found evidence pointing to it)

Last year, in the lead up to the national election, Governor Orr said in May 2023 that he was "very confident" there would not be further interest rate hikes, stating the Reserve Bank had done enough in terms of rate rises. He was interviewed by Mike Hosking on Newstalk ZB on the subject of his rampant confidence in the economy - as this was a highly sensitive matter in Election Year. Hosking also spoke at the same time to former RBNZ Governor, Don Brash, who expressed severe doubts, saying, “[But] the governor indicated it [the OCR] would not be going higher, and that was a surprise both for the market and me personally.”

The RBNZ held onto its "the-OCR-has-peaked" line in its Monetary Policy Statement (MPS) in August 2023, just over one month before the General Election that was held in October. That Statement enabled Finance Minister, Grant Robertson, to issue a Beehive Press Release in September, weeks before the election, saying, "The Reserve Bank is indicating interest rates have peaked .. ". The claim was absolutely vital for PM Hipkins & Robertson's hopes of clinging onto power. It enabled them to argue to millions of Kiwis that the interest rates on their mortgages would fall, persuading them to vote Labour. Enough to swing an election.

Except a short time later, barely four weeks after the October 2023 election was held, which the Nats won, the Reserve Bank dramatically reversed itself. Five days after the signing of the Coalition Agreement on 24 November 2023, the Bank released a new Monetary Policy Statement on 29 November. Instead of forecasting a falling OCR, it forecast a rising OCR. The graph below, obtained from the RBNZ's own data, reveals an OCR projected to rise nearly 25 basis points (from around 5.5% to 5.7%) over the coming year, leading to more potential mortgage rate rises. Had that graph been known about just weeks earlier, then the election result probably would have resulted in a far larger majority for National, since it is lower income earners who would have been most scared by the prospect of higher rates.

If it looks like a partisan RBNZ that favored Labour-Greens, walks like a partisan RBNZ that favored Labour-Greens, and quacks like a partisan RBNZ that favored Labour-Greens, then it probably is a partisan RBNZ favoring Labour-Greens.


Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. Rob blogs at Down To Earth Kiwi 

3,504 views105 comments


May 28

More a disappointment than anything else. I held the belief that New Zealand was one of the few nations that had successfully embraced decency and hope based on equality of citizenship. I realise that decency and hope are subjective but I think you know what I’m getting at. The last 4 years however have seen our nation descent into a winner takes all tribal despotic elitist society. We the people are being herded into those favoured, and those that are not.. all in the name of Power.

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Totally - and it all becomes "clear as crystal" when the RBNZ charter and its Maori theme is compared to that of the Australian Reserve Bank charter.

This is the Australian - note it relates to "the greatest advantage of the people of Australia..." - this is not reflected in the NZ Charter ! No wonder Australia will trample over NZ on so many levels. "Under the Australian charter all deals with NZ will have to be aimed at ensuring the greatest advantage for the people of Australia". While NZ charter is all about mutual respect and te whakatōpū as if a cental bank is some kind of social and race-based justice principled operation where it states the "Future is…



It is now less than two weeks until ACT’s 2024 rally Change Makers. Our special guest this year is Paul Henry, a perfect storm of infectious wit, deep thought, and concern for our country. Paul’s another reason to get your tickets for Change Makers on June 9 in Auckland. We hope to see you there.


New Zealand’s firms, farms and families have (barely) survived six Grant Robertson Budgets, before Grant disappeared in a cloud of debt. He is gone but not forgotten by his old partner in crime Adrian Orr, who reminded us all last week that Grant’s inflation ain’t dead yet and the beatings will continue until morale improves.

On Thursday the Coalition Government’s first Budget…

May 28
Replying to

In a nut shell!

Those in the line of Gov't employ should be reminded of the difficulty in being able to extract blood from a stone.

Mind then I suppose one could adopt the bloody minded Labor attitude..... I'm OK, she'll be right, just print some more.


The RBNZ and Adrian Orr is signalling uncertainty ahead - news today adds more uncertainty to the housing market

Watch the video and the body language ! Why does Ardrian Orr want currency intervention planning now and housing value collapse?

Reserve Bank activates Debt-to-Income restrictions


3 hours ago — Banks will need to comply with the new DTI and LVR restrictions from 1 July 2024


So far the history of RBNZ Monetary policy strategies have been contradictory and confusing. I explain:

According to news articles since 2023, the Reserve Bank of New Zealand (RBNZ) has requested additional funds for currency intervention to defend the New Zealand dollar in a crisis.

The reasoning is that the current level of foreign reserves…

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Lowering interest rates also causes inflation via an increase in money supply , because an increase in indebtedness results, as people borrow more at lower rates.

Fractional reserve banking means that more money must be created to provide the new debt.

If the debt is repaid/erased , then so is the money that was created.

Collapsing the housing bubble will see a lot of money repaid to the banks, who will then erase that money that they created in the first place.

Of course a whole lot of so-called "wealth" will evaporate.

As expected , it will all end in tears for those on the property snakes and ladders board.

For the productive sector of NZ Inc. , which sell…


MacCulloch buys into the giant con that somehow interest rate hikes are an effective monetary tool to control inflation - THEY ARE NOT!

BTW - I totally endorse Charlie, The Jones Boy, Greg, Ray and Zeke's excellent comments and observations earlier in this thread. Interest rate hikes directly feed inflation for 12-18 months, and meanwhile, eviscerate the productive economy, all the while massively rewarding the parasitic financial economy. Yes, eventually inflation does appear to ease INSPITE OF THE RATE HIKES - this is an illusion caused by the debilitating effect these increased costs have imposed on the productive economy. This is one of the most basic concepts out there. Interest rate hikes are equally as inflationary as increases in fuel costs -…

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Thank's for that link, Farmerbraun. I like Stockman, but he skirts around the biggest issue of all - who do we allow to create more than 90% of the money supply, and how this feeds the parasitic financial economy. Until that issue is addressed all other reform is tantamount to merely tinkering with the breakfast menu on board the Titanic. Thankfully, some 35 U$ states are now seriously looking at sound money reform and public banking utility models that benefit society rather than the robber barons. North Dakota led the way more than a century ago and have navigated all of the financial crises since with barely a hiccup. In the U$, the federal system gives individual states this autonomy if they hav…

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