PTA's 'evolving' response to change welcome

The Employers & Manufacturers Association has welcomed the changes signed into the Policy Targets Agreement today by Finance Minister Michael Cullen and Reserve Bank Governor Alan Bollard.

"Though the changes in the PTA are modest, they will be applauded by investors and exporters," said Alasdair Thompson, EMA's chief executive.

"Taking the measure of inflation over a longer time frame should help remove the need to change the official interest rate and in turn that should help reduce the volatility of our exchange rates.

"The slightly expanded inflation target range will reassure international investors that our economic policy is entirely orthodox.

"Keeping the inflation target at 3 per cent or less was never up for debate.

"Most importantly the new PTA aligns us more closely with our major trade partners. Keeping monetary conditions tighter than those of our major trade partners has not equated with achieving price stability over the longer term.

"Reserve Bank Governor Bollard's statement signaling an ongoing evolutionary path for monetary policy is heartening."

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