RBNZ Policy Targets Agreement: Target Practice - ANZ

The Minister of Finance and incoming RBNZ Governor Adrian Orr today released the updated Policy Targets Agreement (PTA) and the RBNZ is now required to “contribut[e] to maximum sustainable employment” in addition to its inflation mandate, explains the research team at ANZ.

Key Quotes

“This adjustment was well foreshadowed. The new PTA is similar in spirit both to its predecessor, and to the mandate in Australia.”

“Governance changes announced at the same time will bring the RBNZ in line with accepted best practice. The decision-making committee will have up to three external MPC members (from 2019). This may change the dynamics and processes of the decision-making process – especially since minutes and a non-attributed vote count will be published.”

“That aside, the announced changes are largely about bringing the legislation into line with existing flexible inflation targeting practices. Focus on the 2% mid-point of the target band has been maintained. We see few implications for the monetary policy outlook.”