Reserve Bank Sets New Targets

September 21, 2012 New Zealand Taxation

New Zealand dollarA new Policy Targets Agreement has been signed, outlining the goals of the Reserve Bank over the coming years.

On September 20th the Finance Minister of New Zealand Bill English and the upcoming Reserve Bank Governor Graeme Wheeler signed a new Policy Targets Agreement (PTA), outlining the Reserve Bank’s aims and policies over the next five years.

The new PTA aims to address some of the issues which New Zealand faced during the global economic downturns in 2008, and Bill English described the changes as only “some additional wording” which “…has been agreed with the new Governor to reflect lessons from New Zealand’s last economic cycle and the Global Financial Crisis.”

The Minister explained that the previous PTA has served New Zealand well, and no major changes were required to the aims, and only minor adjustment were made to reflect international best practices for monetary policy frameworks.

Graeme Wheeler described the aims of the new PTA as price stability in New Zealand, and ensuring that there is no severe fluctuations in the country’s economic output, or in the value of the New Zealand dollar.

The new Governor also said that the Reserve Bank is currently developing new “macro-prudential tools” in cooperation with the Treasury and the government in order to moderate credit cycles.

The Reserve Bank will continue to aim to keep the rate of inflation at between 1 and 3 percent over the foreseeable future.

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