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New Zealand Finance Minister Bill English said the nation’s central bank shares some of the blame for slower economic growth this year after raising rates too high in 2014.

Bill English. Photographer: Mark Coote/Bloomberg

“It’s one of the factors, along with dairy prices, that probably led to a much flatter 2015 than we had expected,” English said in a Bloomberg Television interview Thursday. “In retrospect, they lifted them a bit far” and “had to go back,” he said, adding “it could be quite a while before we’re raising rates in New Zealand” again.

Reserve Bank Governor Graeme Wheeler last week cut his benchmark rate for a fourth time this year, returning it to a record-low 2.5 percent to fully reverse his 2014 tightening. The bank, which aims to keep inflation around 2 percent on average over the medium term, has been criticized by some economists for a rigid adherence to inflation targeting during a period of globally weak price pressures.

“It’s debatable as to whether the Reserve Bank tightened too much last year,” said Craig Ebert, senior economist at Bank of New Zealand in Wellington. “Things clearly changed since it embarked on that exercise.”

A Reserve Bank spokesman said the bank had no comment.

Policy Reversal

Wheeler started tightening in March 2014, lifting the official cash rate four times in four months to 3.5 percent in anticipation of faster inflation. The increases sent the New Zealand dollar above 88 U.S. cents to near a record high, curbing export returns and damping import prices.

He started to cut the benchmark in June this year as a slump in oil prices and weaker growth slowed inflation to just 0.3 percent, well below the Reserve Bank’s 1-3 percent target band and the midpoint it aims for.

It’s not the first time English has criticized the central bank. In June, he said Wheeler needed to get inflation back to target and had plenty of room to cut rates.

Sole Decider

Unlike most developed-nation central banks, the governor is the sole decision maker on monetary policy at the RBNZ, though Wheeler has stressed he consults closely with a committee of advisers.

English said New Zealand’s experience is “a bit of a lesson” for the U.S. Federal Reserve, which earlier today raised rates for the first time in almost a decade.

Still, the Fed’s rate increase “is good news for our economy just because it’s a sign of U.S. strength” and might help to weaken the New Zealand dollar, which “still looks overvalued,” English said.

“The theory is that with the Fed starting to raise rates, as the interest-rate differential is reduced over time” New Zealand’s currency “will weaken relative to the U.S. dollar,” he said. “The sweet spot for us is the kiwi dollar a bit weaker against the U.S. and a recovering U.S. economy as a locomotive pulling the region along, and that’s possible over the next year or two so our growth prospects look pretty good.”

New Zealand’s economy grew 0.9 percent in the third quarter from the second, the government’s statistics agency said today, beating the 0.8 percent median forecast of economists. However, annual growth slowed to 2.3 percent from 3.7 percent a year ago after a dip in the first half of 2015, when falling dairy prices began to bite.

“We’re seeing the non-dairy export sector, and particularly tourism, picking up pretty strongly, and that’s reflected in these figures today,” English said.

— With assistance by Andy Clarke, and Angie Lau

( Updates with economist's comment in fourth paragraph. )