New Zealand’s new monetary policy framework, which comes into effect today, is supported by a handbook developed by the Reserve Bank.
Recent amendments to the Reserve Bank Act 1989 saw the addition of an employment objective to the Reserve Bank’s long-standing price stability objective, and the creation of a formal Monetary Policy Committee with members from both inside and outside the Reserve Bank.
The Monetary Policy Handbook explains the new framework and sets out key assumptions about how the economy operates, the contribution of monetary policy to New Zealand’s economy, and how to design processes to optimise the benefits provided by a legislated Monetary Policy Committee.
“The handbook will support effective and targeted deliberations, and make best use of the diverse perspectives within the Monetary Policy Committee,” Reserve Bank Governor Adrian Orr said.
“The handbook is intended to be a living document and will evolve over time, with input from the Monetary Policy Committee. We also think people and groups outside the Reserve Bank and the Monetary Policy Committee will find material in the handbook useful as an educational tool to explain how monetary policy works and how it contributes to the economy.”
A series of three Reserve Bank Bulletin articles will be published during the next few days, providing even more in-depth information to support understanding of monetary policy and the new framework.
The articles are titled:
- Effective monetary policy deliberation in New Zealand,
- Monetary policy objectives – price stability and macro-stabilisation, and
- Monetary policy strategy in New Zealand.