New Government Considering Broader RBNZ Changes

The new NZ government, which is made up of 3 coalition partners (led by the NZ National Party, along with the NZ First and ACT parties), has announced it will consider broader changes to the RBNZ remit.

• As expected, the new government will shift the central bank back to a single mandate focused solely on price stability, removing the current dual mandate, which included employment and was introduced by the previous Labor government in 2018.
• Other changes under consideration are that the new government "will take advice on giving the RBNZ time targets for monetary policy, removing the Treasury Dept. observer from the Monetary Policy Committee and returning to a single decision maker model." (per BBG, see this link).
• The RBNZ is on the record as stating that it doesn't agree with changes to the timing around when inflation should return to the target range.
• On balance, these are hawkish developments but not completed unexpected.
• NZGBs sit 1-6bps cheaper across the major benchmarks have ticked marginally lower through the session however ranges remain narrow thus far.