Calls for overhaul of RBNZ inflation target

Jul 27, 2016

The emergence of persistently low inflation has prompted calls for an overhaul of the Reserve Bank's inflation target - RNZ News

Former Reserve Bank chairman Arthur Grimes, now senior fellow of Motu Research, favours tweaking the PTA by returning it to a 0-3 percent target band and doing away with the mid point.

"It means that the Reserve Bank doesn't have to act quite as markedly as it would when inflation is going outside the range, and staying outside the range, for a little while."

In this case, it would take the pressure off the central bank to cut rates from 2.25 percent as expected next month, and risk further fanning the housing market bonfire.