Reserve Bank of New Zealand
Inflation band 1 - 3 percent unchanged, focus remains on 2% mid point
- PTA says policy also aimed at supporting maximium level of sustainable employment
A committee decision making authority now put in place:
- 5 to 7 voting members for MPC decision making
- If 7, will be 4 internal bank members, 3 members external to the bank (if 5, still majority will be internal members)
- Committee will begin in 2019 (expected to begin then, so perhaps some flexibility on timing)
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NZD is trading around 0.7233.
While the details are new news, the direction of the new PTA was well expected:
- inclusion of an employment mandate,
- unchanged inflation mandate,
- policy making to be committee decision now instead of sole responsibility of the Governor
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Full text of the Statement from the Bank on the new PTA: New PTA requires Reserve Bank to consider employment alongside price stability mandate
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If you are unfamiliar with monetary policy decision making at the RBNZ, officially there is one decision maker, the governor. More here:
- Its not a widely known fact, but its no secret either, that at the Reserve Bank of New Zealand the sole decision making power for monetary policy is the Governors.
In brief ... In practice, monetary policy decisions under previous governor Graeme Wheeler:
- There's a committee of 12 people (2 from outside the central bank who come in four times a year as part of the MPS process)
- These 12 give advice to the four RBNZ governors. (The four are Wheeler, deputy governors Grant Spencer and Geoff Bascand, and assistant governor John McDermott.)
- "The four governors then make the decision," Wheeler said. "There's no example, at least in the past decade, of the governor not taking a decision consistent with the recommendation of the committee."
Previous Governor Graeme Wheeler .... he has since departed to be replaced by Acting Governor Grant Spencer who will hand over the new Governor Adrian Orr on March 27
