Parliament

Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 

New Policy Targets Agreement signed today



20 September 2012

New Policy Targets Agreement signed today

Finance Minister Bill English and incoming Reserve Bank Governor Graeme Wheeler today signed a new Policy Targets Agreement, which sets out specific targets for maintaining price stability.

The new Policy Targets Agreement takes effect on 26 September, when Mr Wheeler starts his five-year term as Governor.

The agreement continues to require the Reserve Bank to keep CPI inflation between 1 per cent and 3 per cent on average over the medium term.

Within this target, the new agreement now requires the Bank to focus on keeping future average inflation near 2 per cent.

The PTA also includes a stronger focus on financial stability, by including asset prices in the range of indicators the Bank monitors, and requiring the Bank to have regard to the soundness and efficiency of the financial system in setting monetary policy.

“I believe that the existing policy targets agreement has served New Zealand well and there are benefits in maintaining consistency in the agreement,” Mr English says. “Therefore, I did not feel that any major changes were required.

“However, the Global Financial Crisis has focused some attention on monetary policy frameworks, and I want to ensure the PTA continues to reflect best international practice.

“Consequently, some additional wording has been agreed with the new Governor to reflect lessons from New Zealand’s last economic cycle and the Global Financial Crisis.

“As we’ve said before, the Government is also working with the Reserve Bank and Treasury to assess whether further macro-prudential tools could help moderate credit cycles, by building additional resilience when it is likely to be needed. That work will continue.”

Mr Wheeler says the new PTA remains focused on maintaining price stability, as well as avoiding unnecessary instability in economic output, interest rates and the exchange rate.

“The focus on the 2 per cent midpoint will help better anchor inflation expectations,” he says.

“In addition, the PTA’s stronger focus on financial stability makes it clearer that it may be appropriate to use monetary policy to lean against the build-up of financial imbalances, if the Reserve Bank believes this could prevent a sharper economic cycle in the future.”

Mr Wheeler also emphasised that the macro-prudential policy tools currently being developed by the Bank should be separate from, but complementary to monetary policy. “The primary purpose of such tools will remain to promote stability of the financial system.”

Mr Wheeler will send a letter to the Finance Minister setting out how he plans to manage his relationship with the Minister, recognising the Bank’s operational independence.

“It will ensure the Government and the Reserve Bank keep each other fully informed about fiscal and monetary policy issues,” he says.

Weblink to new Policy Targets Agreement:
http://www.rbnz.govt.nz/monpol/pta/


________________________________________


© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Why New Zealand Needs To Change Its Defence Habits


In a flashback to the military displays of days gone by, one of our frigates recently joined a Carrier Strike show of force in the South China Sea, en route to a joint military exercise in Singapore with our traditional allies, called BersamaGold21. Reportedly, Anna Powles, from the Centre of Defence and Security Studies at Massey University felt this to be a case of us doing our bit to uphold international law, and the right of free transit through the region in question... More>>

Government: New COVID-19 Protection Framework Delivers Greater Freedoms For Vaccinated New Zealanders


Vaccinated New Zealanders will regain everyday freedoms when the country moves to a new simplified COVID-19 Protection Framework that doesn’t rely on nationwide lockdowns as the main measure to stop the virus spreading. In a suite of announcements that establish a pathway out of restrictions the Government is also providing up to $940 million per fortnight to support businesses through the challenging period... More>>

ALSO:





 
 


Government: Responds To Independent Review Into WorkSafe

The Government has clear expectations that WorkSafe must action the recommendations of the independent review into the regulator to improve its management of adventure activities following the tragedy at Whakaari White Island, Workplace Relations and Safety Minister Michael Wood says... More>>

Government: New Zealand Secures Historic Free Trade Deal With The United Kingdom
New Zealand and the United Kingdom have agreed in principle the details of a historic Free Trade Agreement (FTA), which will further accelerate our COVID-19 economic recovery say Prime Minister Jacinda Ardern and Minister for Trade and Export Growth Damien O’Connor... More>>

ALSO:

Ombudsman: Launches Investigation Into MIQ Booking System
The Chief Ombudsman Peter Boshier is launching a broad investigation into the Managed Isolation and Quarantine (MIQ) booking system after receiving hundreds of complaints... More>>

ALSO:


Pay Cheque To Pay Cheque: Half A Million New Zealanders Have No Savings
New findings from the Consumer NZ sentiment tracker found that 15% of New Zealanders had no savings, and a further 27% were anxious about their level of savings and would like to have more tucked away... More>>


Government: Mandatory Vaccination For Two Workforces

Large parts of two workforces critical to preventing the spread of COVID-19 will be required to be vaccinated, COVID-19 Response Minister Chris Hipkins said today. “Our education and health and disability workforces have done an incredible job throughout this pandemic to keep themselves and people safe,” Chris Hipkins said.... More>>


Green Party: Deeply Concerned Space Launches May Be Breaching Nuclear-free Laws

The Green Party is deeply concerned that space launches by Rocket Lab may be breaching nuclear-free laws, given our long-standing position as a signatory of the Nuclear Non-Proliferation Treaty... More>>


 
 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

InfoPages News Channels