Story: Spending in the economy

Managing money

Managing money

In 1989 Parliament made controlling inflation the Reserve Bank’s primary task. From 1999 the bank used the official cash rate (OCR) – the wholesale cost of borrowing money – as the main instrument to do this. A rise in the OCR would be used to reduce the spending in the economy, a cut in the OCR would encourage spending. In the newspaper column that this 2004 cartoon originally accompanied, columnist Martin van Beynan preferred no change.

The Reserve Bank's other tasks include the registration of banks, and the regulatory oversight of banks, building societies, credit unions and finance and insurance companies. The bank also sets criteria that protect the whole financial system. Since it was set up in 1933 the bank has been responsible for issuing New Zealand’s bank notes and coins.

Cartoon courtesy of Alistair Nisbet

Using this item

Alexander Turnbull Library
Reference: DCDL-0004869
Cartoon by Alistair Nisbet

Permission of the Alexander Turnbull Library, National Library of New Zealand, Te Puna Mātauranga o Aotearoa, must be obtained before any re-use of this image.

All images & media in this story

How to cite this page:

Paul Dalziel, 'Spending in the economy - Spending and investing', Te Ara - the Encyclopedia of New Zealand, (accessed 1 July 2022)

Story by Paul Dalziel, published 11 Mar 2010, updated 16 Sep 2016