Tuesday, April 23, 2024

RBNZ Monetary Policy Committee remit and charter renewed

The Reserve Bank’s Monetary Policy Committee remit and charter remains largely unchanged following its first five-year review.

Finance Minister, Grant Robertson said only minor changes to the monetary policy framework had been made to the remit.

“This review follows consultation with the Reserve Bank and Treasury. I have made only minimal changes to the remit as the current monetary policy framework as I believe it remains fit for purpose,” Mr Robertson said.

The MPC remit sets out the operational objectives for formulating monetary policy and the charter provides detailed decision making procedures and transparency and accountability settings for the MPC.

“The minor changes will improve clarity, align the wording with the Reserve Bank of New Zealand Act, and provide context for the relationship between monetary and fiscal policy.”

“The price stability objective has been changed to align the wording in the remit with the Act. The change will require the MPC to ‘achieve and maintain’, rather than ‘keep’, future annual inflation between 1 and 3 percent over the medium term. This objective has also been clarified to note that MPC should discount disturbances to inflation that are expected to be temporary in a manner consistent with meeting the medium-term target.”

He said the Reserve Bank would also continue to assess the impact of its monetary policy decisions on the Government’s objective of supporting sustainable house prices as part of a redrafted context section.

“This section also includes the importance of understanding the interaction of monetary and fiscal policy and information sharing between monetary and fiscal authorities.”

“In the charter, which is agreed between the Government and the Reserve Bank, clauses have been added to support the remit changes and to clarify that the MPC should communicate key considerations of its decisions with regard to financial risks,” Mr Robertson said.

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