RBNZ doesn’t want to indicate the terms for returning inflation to the target

The Reserve Bank of New Zealand didn’t support the change to its monetary policy authority. According to these changes, the bank should indicate the terms it has to bring inflation back to target. The bank needs to argue that the potential costs outweigh the possible benefits.

On Wednesday, the central bank declared in Wellington that it prefers to maintain a status quo. It will be necessary to achieve 2% inflation during an indefinite period to do this. Such a step will make the processes more transparent and increase the bank's credibility. However, the bank thinks that the cost of determining the precise terms is much higher than the potential benefits.

Finance Minister Grant Robertson has reached out to the Treasury to define if it's worth asking the central bank for exact terms.

The document published by Treasure last year says about the relevance of this question. It is important because the inflation pressure remains. This resulted in inflation exceeding the target level for several years.

Some central banks have set timeframes for achieving goals in their monetary policy. For example, the Bank of Canada sets itself deadlines of 6–8 quarters.