Both remained largely unchanged
The Reserve Bank’s monetary policy committee remit and charter have been renewed, with minor tweaks to the monetary policy framework following the first five-year review.
The MPC remit, which defines the committee’s operational objectives, required MPC to “achieve and maintain” annual inflation to 1% to 3% over the medium term, with a focus on the 2% mid-point. The remit also retained the objective to support maximum sustainable employment.
“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,” Finance Minister Grant Robertson said.
RBNZ Board Chair Neil Quigley (pictured above) said the new remit “largely represents a continuation of the current monetary policy regime, with some changes that support more clarity for the monetary policy objectives.”
The MPC remit is set by the minister following advice from RBNZ, which incorporated feedback from two public consultations, findings from surveys and public workshops, and relevant analysis on key monetary policy issues.
“We would like to thank all those who contributed to the review through public submissions and other forms of engagement,” Quigley said.
As part of the review, the MPC charter, which outlines the decision-making procedures for the committee and sets out requirements to support transparency and accountability, was also updated.
Unlike the remit, the charter is agreed between the MPC and the minister.
The new charter reconfirmed seeking consensus as a priority during the MPC decision-making process. MPC still has the option to vote, for example on the official cash rate, if a consensus is not reached.
The new charter also clarified expectations of MPC members when speaking publicly on issues relevant to monetary policy, including communication requirements relating to processes followed in reaching monetary policy decisions.
“In the charter … 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,” Robertson said.
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