"Our economic response"

This morning's Politik newsletter covers some of the increasing disquiet over whether the Reserve Bank has been doing its job.

This bit of a Parliamentary exchange could be a worry, depending on how inclusively one should read the "our". 

Parker rejected the assumption in the question, but he did so with what appeared to be a concession that the Bank may have been preoccupied with employment. 

“This was a time of considerable uncertainty, with unemployment forecast to reach significant levels,” he said. 

“I consider our economic response has been instrumental in the record low levels of unemployment we now have. 

“If we did not provide that support, the economic consequences for New Zealanders were dire.”

If 'our' is read as meaning the Labour government and the fiscal response, then all's fine. The Bank used monetary policy in response to end-times economic forecasts. The Government used fiscal policy to get things to record low levels of unemployment.

Now it's still bad in an important sense - the last Monetary Policy Statement had a 2.5% output gap, meaning an overheated economy. Government should not be providing continued fiscal stimulus into a positive output gap. 

But it's not bad-bad.

If 'our economic response' means the combination of the monetary and fiscal response, he's then lauding the Reserve Bank for delivering a positive output gap. And that would be bad-bad. 

Lauding the Bank for avoiding 10% unemployment would be defensible. People can argue about whether those forecasts were way out in the first place, but it isn't prima facie crazy. Lauding it for overshooting so far that we've wound up with very high inflation and a substantial positive output gap - that's dangerous for the credibility of the Remit. 

So I really hope 'our' is a narrow 'our' here.