About the framework
There are 4 key components to New Zealand’s monetary policy framework:
- the Remit
- the Charter
- the code of conduct
- the monetary policy strategy
The Remit is the document that guides our Monetary Policy Committee’s (MPC) decision making on monetary policy and Official Cash Rate adjustments every 6 weeks.
The MPC is also bound by a Charter and code of conduct.
The Charter provides directions on decision-making procedures, transparency and accountability. The MPC makes decisions and communicates them in line with the Charter.
The code of conduct sets out minimum standards of ethical and professional conduct that MPC members must follow.
The MPC’s monetary policy strategy is the overarching plan for how they will formulate monetary policy under different circumstances to achieve their objectives.
Read about the history of the monetary policy framework in New Zealand
Monetary policy plays an important role in supporting economic prosperity. The Minister of Finance can set the targets for the MPC’s objectives, offer guidance on how the MPC should go about achieving these targets, and set out what other factors the MPC should take into its decisions.
The Minister does this by issuing a Remit for the Monetary Policy Committee.
The current Remit came into effect on 20 December 2023, the day after Royal Assent of the Reserve Bank of New Zealand (Economic Objective) Amendment Act 2023
The MPC Charter is required by 'the Act' to broadly cover:
- requirements to promote transparency and accountability
- requirements for summary records of the MPC’s meetings and other information published by the MPC and decision-making procedures.
As part of the Remit Review, the Minister of Finance and the MPC are required to consider whether the Charter should be amended. The Charter is agreed between the MPC and the Minister of Finance.
The current Charter came into effect on 30 April 2026.
The Treasury observer role was formally established in February 2019 but has effectively been in place since 2018.
The function of the Treasury observer is to:
- support decision making by the Monetary Policy Committee (MPC) (for example, by sharing information on fiscal policy
- facilitate the co-ordination of monetary and fiscal policy
- carry out any other function agreed between the chairperson and the Secretary to the Treasury.
Regular reviews of monetary policy in New Zealand
The Reserve Bank of New Zealand Act 2021 requires us to undertake 2 review processes at least every 5 years:
- Review of the Monetary Policy Remit (Remit Review)
- Review and assessment of the formulation and implementation of monetary policy (RAFIMP).
These regular processes of review make sure that the operational monetary policy framework remains fit for purpose.
The first Remit Review under this legislative change took place across 2022 and 2023. Our advice to the Minister of Finance was published on 27 June 2023. As a result of this review process, the Minister of Finance made changes to the Remit.
The next review will take place no later than 2028.
Find out more about the Remit Review
We published the results from the first RAFIMP on 10 November 2022. The report covers the period of 2017 to 2022. The report found our formulation and implementation over this period was consistent with the objectives set out in the remit, and highlighted 9 areas for improvement.