Reserve Bank says fiscal laxity contributed to inflation

Radio NZ reports:

He said the then-government’s various big-spending policies, such as the wage subsidy and other pandemic support policies, also worked against the RBNZ’s approach and contributed to the inflation spike.

“Containing inflation over this period required the OCR to be higher than otherwise, if fiscal support during the pandemic had been more timely and temporary.”

This should be bigger news. The Reserve Bank Chief Economist explicitly says the spending of the last government contributed to the inflation spike. He correctly says that the problem wasn’t fiscal support but the fact it wasn’t temporary.