Rearview mirror stuff: Will RBNZ overshoot?

Source: Andy Warhol

When he was Reserve Bank governor, Don Brash was fond of comparing managing monetary policy with driving a car when your only view of the road is through the rear-view mirror.

That's one reason why so few managers of monetary policy have ever managed to avoid a recession following a period of an excess of what former Federal Reserve chair Alan Greenspan liked to call “irrational exuberance.”

The Reserve Bank of Australia managed to avoid recession in the wake of the GFC, the lone central bank in the developed world to manage that feat, and it looks as if the Fed might avoid a US recession this time around, though it may be too soon to tell.

But our Reserve Bank governor Adrian Orr didn't even try to avert the recession we're currently bobbing in and out of.

Orr has said explicitly that NZ needed to have a recession.