MNI BRIEF:Conflicting Mandates Saw RBNZ Fuel Inflation: Report

The Reserve Bank of New Zealand was overconfident about its monetary policy framework and lost its focus on price stability during the pandemic while taking on too many mandates, according to a review released on Tuesday by a former governor.

Graeme Wheeler, RBNZ Governor for five years to 2017, made the criticisms in a research report released by think tank the NZ Initiative, which said the bank was distracted by political objectives such as climate change and had difficulty dealing with conflicting “dual mandate” objectives.

The report says that central banks, including the RBNZ, were largely responsible for the rise of inflation through their errors. In response, RBNZ Governor Adrian Orr said he acknowledged the bank’s decision may have influenced the rise of inflation.

Orr said the bank was in the midst of its first ever five-year review of its monetary policy remit, and encouraged public participation in the process.