What Nolan said

On Labour's new policy to abandon central bank independence should they be elected before they reconsider this new bit of nonsense, I'll just second what Matt Nolan's been saying over at TVHE.

As I have a hard time imagining that Labour will be electable anytime in the next two terms, and as I have a (slightly less) hard time imagining that this policy will stick, I'm less worried than Matt is. It would kinda be like my announcing on the blog that, were I to win the multi-billion-dollar lotto, I'd mount lasers on keas and attack the Beehive with my furious parrot Air Force, possibly leading them on a restored Spitfire or somesuch. Yeah, maybe I could fund that if I were to win the lotto. But odds are stronger that saner heads (Susan) would persuade me otherwise long before that lotto win comes round.

And it's not like the RBNZ was particularly independent under the last Labour government anyway. The medium term kept seeming longer and longer....

For Cresswell's benefit: if you're going to have a reserve bank, you do much better with inflation targeting than most other goals. I still am fond of free banking models though: true bank independence means depoliticizing the money supply.
Update: By way of clarification: The RBNZ, under Brash's watch, was about as well run as a reserve bank ever can be. Inflation targeting has its problems, but the alternatives under any realistic central banking system tend to be worse. We can do a lot worse than what we've got. I'd still push the button for a free banking system. But given that we've got a central bank, inflation targeting can be a pretty good way to go.