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Reserve Bank Act modernised to include focus on employment

Hon Grant Robertson
Minister of Finance

18 December 2018
PĀNUI PĀPĀHO
MEDIA STATEMENT

Reserve Bank Act modernised to include focus on employment

The Coalition Government is delivering on its promise to modernise the Reserve Bank Act, with legislation passed by Parliament today introducing a focus on employment outcomes alongside the current price stability mandate, Finance Minister Grant Robertson says.

“The legislation governing the Reserve Bank is nearly 30 years old. The Coalition Government made it a priority to start work on modernising the Act within our first 100 days, delivering on the commitment in the Coalition Agreement between Labour and New Zealand First,” Grant Robertson said.

“While the single focus on price stability has generally served New Zealand well, there have been significant changes to the New Zealand economy and to monetary policy practices since the Act was enacted.

“The Reserve Bank now has a dual mandate, similar to central banks in other advanced economies including Australia, the US and Norway. Alongside price stability, the Bank has now also been tasked with supporting maximum sustainable employment.

“The legislation today also introduces a new decision-making structure for the Reserve Bank. Instead of sole responsibility remaining in the hands of the Governor, we are recognising the benefits of committee decision-making by creating a seven-member Monetary Policy Committee (MPC) for monetary policy decisions like setting the Official Cash Rate (OCR).

“The appointment process for the MPC is under way. It is expected that it will become operational during the first half of 2019. Phase Two of the Review looking into the financial policy provisions of the Reserve Bank Act is progressing,” Grant Robertson said.

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