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RBNZ: new PTA an “evolution”

The Reserve Bank will not drastically change its monetary policy after adding employment outcomes to its price stability targets, RBNZ Assistant Governor John McDermott said in a speech today.

Thursday, April 12th 2018, 4:43PM

by Dan Dunkley

McDermott said the central bank's new Policy Targets Agreement (PTA) would “reinforce the flexibility” of the central bank’s long-term approach.

Last month Finance Minister Grant Robertson and new Reserve Bank Governor Adrian Orr signed an agreement to require monetary policy to be be conducted so it contributes to supporting maximum levels of employment. RBNZ still has to keep annual CPI inflation between 1 and 3 percent over the medium-term, with a focus on keeping it close to 2 percent.

The new PTA triggered market fears of a radical change in direction for the central bank, but those concerns were quelled by McDermott today. He said the new PTA was a continuation of gradual policy change: “The Reserve Bank has always had regard to developments in the labour market, and this has been encouraged by our increasingly flexible approach.

“We regularly assess the available labour market data and are committed to discussing labour market developments. So my current sense is that, to a large extent, the changes help reinforce the flexibility in our approach,” he added.

McDermott said the creation of a five-to-seven member committee for monetary policy decisions reflected the need for a “great deal of judgement”. He added: “The New Zealand framework has changed significantly over thirty years, reflecting lessons learned and the changing economic and political environment. We are about to enter the next stage of that evolution.”

Dominick Stephens, chief economist at Westpac, said McDermott’s speech offered few clues about RBNZ’s direction: “The Government appears to be walking a fine line between appeasing long-term critics of monetary policy and reassuring financial markets that the RBNZ will remain focussed on inflation. Today's speech was consistent with that delicate balancing act, but contained no new details to inform either the inflation hawks or the doves.”

Tags: RBNZ

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 ▼3.19 ▼3.49
SBS Bank Special - 2.79 ▼2.69 ▼2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 2.79 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 29 June 2020 9:13am

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