Mike's Minute: The Reserve Bank came to the party

Gold medal for Kelly Eckhold at Westpac. 

He called it, or at least suggested the hold we saw from the Reserve Bank wasn't as "home run" as many might have predicted. 

This, in a dry, old world of monetary policy, is little short of a blockbuster. 

I guess you could argue the 4-3 vote is a good indication of the wider view. 

The economy is far from firing. It's far from needing to be contained. So why hike? 

Well, because we have inflation above the target. The Bank's job is to keep inflation within the target. Technically, they are failing in that job. 

The dollar fell, which, like all economic matters, is good and bad. Fantastic for exporters. No good for the importers, and we do a lot of importing, including things like petrol. 

The hold argument is also about the reality of what you are achieving by holding. 

Does oil drop? Do rates drop? No, they don't. 

Do you squeeze already pressured budgets? Yes, you do. 

Part of their argument, perhaps the most fascinating part, is that they don't see price pressure. The person in the middle is soaking up the increased cost and not passing it on to the customer. 

Food might be a good example. At 1.9%, it's well contained. 

Maybe there is a bit of that about the place. We have reached the point where the retailer would like to sell for more, but the buyer just won't have it. So it's either the current price or no sale. 

Of course, it ain't over. The RB will be back in December. Surely a move is on by then and you'd probably argue we might be looking at one next year. 

But how useful is the publishing of the vote, the names and how they voted? That's transparency and that's thanks to the new Government who, by the way, voted to hold. 

Side note; she appears, once again, to be a material improvement on her predecessor in her understanding of the economy. 

The politics? I don't think there are any. It saves the Government another round of explanations about recovery and war, but I think most thinking people get it anyway. 

But for the battler, the middle New Zealander, the person who just wanted a brief break in the onslaught on the way to better days, the RB surprised many and came to the party.