The Kiwi question: Have central banks learned nothing since 2008?

Entering a 'monetary policy arms race'

clock
Liontrust Asset Management's David Roberts
Image:

Liontrust Asset Management's David Roberts

The kiwi is a small, flightless bird as well as the nickname for the New Zealand dollar, which plunged overnight and caused markets to take flight.

Here, in microcosm, is the challenge we now face: this week, the country saw unemployment fall to an 11-year low, wage growth surge and inflation accelerate to 1.7% and yet the Reserve Bank of New Zealand (RBNZ) cut interest rates half a percentage point to 1%, an all-time record low, citing potential problems 'overseas'. Quickly, the currency fell more than 2%, just as the US formally labelled China a currency manipulator. Surely to goodness we haven't come to this? In the decade post the Global Financial Crisis (GFC), central banks and governments around the globe worked together to...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Investment

Trustpilot