About monetary policy
This section provides a variety of articles and papers that explain how the Reserve Bank uses monetary policy to maintain price stability.
Introduction to monetary policy
Explaining Monetary
Policy (PDF 415KB)
This brochure explains what monetary
policy is, and how the Reserve Bank implements it.
July
2007
What is
inflation?
A fact sheet explaining what inflation
and deflation are in the context of New Zealand.
December
2006
What is the Official Cash Rate?
A
fact sheet outlining the instrument that the Reserve Bank uses to implement
monetary policy.
December 2006
What is the Policy Targets
Agreement?
This page explains the contract negotiated between the Reserve
Bank and the Minister of Finance that defines price
stability.
September 2012
Monetary policy and the New Zealand
system: an historical perspective (PDF 1.2MB) by Neil P. Quigley, G92/1
A
discussion paper from 1992 provides some analysis of the various monetary and
regulatory regimes used in New Zealand since the 19th
century.
1992
Implementing monetary policy
For an analysis of interest rate margins.(PDF 162KB)
Monetary policy accountability and
monitoring
This document explains the way in which the Reserve Bank is
monitored and held to account for its conduct of monetary policy. It
focuses, in particular, on the crucial role assigned to the Bank's Board in the
Reserve Bank of New Zealand Act.
October 2006, also available in
PDF (92KB)
Proposed instrument change
A
discussion document released in March 1997 proposing a change in the instrument
used to implement monetary policy, from targeting settlement cash balances to
targeting the overnight interbank interest rate (the cash
rate).
March 1997
Review of submissions and
decision
A discussion document released in June 1997 isolating the key
issues addressed in examining the proposal to change instruments and explaining
the reasons for the resulting decision.
June 1997
Changes to operating procedures (PDF
32KB)
This Bulletin article reproduces the document released on the 8th
February 1999, in which the Bank announced its intention to adopt an official
cash rate as its primary instrument for implementing monetary policy.
Reserve Bank Bulletin Vol. 62 No. 1
A cash rate system for implementing
monetary policy (PDF 222KB)
This Bulletin article explains in greater
depth a number of considerations relevant to the decision announced on the 8th
February 1999 to adopt an Official Cash Rate as the Bank’s primary
instrument for implementing monetary policy.
Reserve Bank Bulletin
Vol. 62 No. 1
Independent Review of the
Operation of Monetary Policy
In May 2000, the Government initiated a
review of New Zealand's monetary policy framework. Professor Lars Svensson of
Stockholm University was appointed to conduct the review and to report by the
end of February 2001. This section provides a number of documents related to the
review, including Professor Svensson’s report.
February
2001
Finance and Expenditure Select Committee Inquiry into the Future Monetary Policy Framework
The Reserve Bank released its submission to the
Finance and Expenditure Committee’s Inquiry into the Future Monetary
Policy Framework.
27 July 2007
Reserve Bank Board of Directors’ Submission on Future Monetary Policy Framework
The Reserve Bank Board of Directors have made a separate submission (PDF 46KB) to the Finance and Expenditure
Committee’s Inquiry into the Future Monetary Policy
Framework.
30 July 2007
Reserve Bank submission to the Commerce Committee on the inquiry into housing affordability in New Zealand
This submission is in three sections. The first
section begins by looking at trends in housing affordability. The second
section of the submission looks at the drivers of house prices. The third
section of the submission looks at whether there are any areas that might
warrant policy attention from government. The submission includes background
material and some policy suggestions which, it is hoped, will be of help to the
committee.
June 2007
Supplementary Stabilisation Instruments (SSI)
A Mortgage Interest Levy, a detailed option
A
report prepared by the Reserve Bank and Treasury, and provided to the Minister
of Finance, outlining in greater detail the option of a Mortgage Interest levy
as a supplementary tool to assist monetary policy, was released on 23 February
2007. The report is also available as a PDF (110KB).
Also released was the accompanying letter to the Minister
of Finance.
February 2007
Supplementary Stabilisation Instruments
(SSI) report released
On 6 April 2006 the Reserve Bank and the Treasury
released a joint report (PDF 276KB) on possible
additional tools to supplement the role of interest rates in managing demand
pressures and inflation. Also released was a letter to
the Minister of Finance, providing a summary of the report and
recommendations.
April 2006
Terms of
Reference to investigate supplementary instruments
A terms of reference
was released on 10 November 2005 for a joint Reserve Bank/Treasury project
to investigate supplementary instruments that could be used to complement
monetary policy in the task of containing inflation
pressures.
November 2005
