Reserve Bank OCR announcement

Questioned by reporters at Parliament about how the Government could take credit for the Reserve Bank's move, Luxon and Willis were defensive.

Luxon highlighted how the Government had "refocused the Reserve Bank on price stability" with its first policy change when it came to power. This was referencing the removal of the dual mandate where the Reserve Bank had to consider unemployment as well as price inflation.

Willis responded to the criticism by commenting on how the Reserve Bank itself had commented on the role played by fiscal policy in addressing inflation.

The Reserve Bank had said in its statement that "government expenditure is declining as a share of the economy, with contractionary impacts already felt and expected to continue". 

About tax cuts, the central bank's statement said: "whether tax cuts will boost consumption is more uncertain. While tax cuts could stimulate demand, it is also possible that households might be more cautious about spending in the current economic environment."