New Zealand Publishes Terms of Reference to Review RBNZ Act

By Sophia Rodrigues

     SYDNEY (MNI) - The first step to review the Reserve Bank Act to include

employment as a monetary policy objective and replace the governor as single

decision maker for monetary policy with a committee-based model, was undertaken

Tuesday with the release of the terms of reference by new Finance Minister Grant

Robertson.

     The terms of reference, published Tuesday, said the review will be

undertaken in two phases, with the first phase to be led by the Treasury who

will work closely with the RBNZ, and will be supported by a new separate

Independent Expert Advisory Panel. A Bill to progress the review will be

introduced as soon as possible in 2018.

     The first phase will:

     --recommend changes to the Act to provide for requiring monetary policy

decision-makers to give due consideration to maximizing employment alongside the

price stability framework

     --recommend changes to the Act to provide for a decision-making model for

monetary policy decisions, in particular the introduction of a committee

approach, including the participation of external experts. 

     --consider whether changes are required to the role of the Reserve Bank

Board as a consequence of the changes to the decision making model.

     In the second phase, the RBNZ and the Treasury, in consultation with the

advisory panel, will jointly produce a list of areas where further

investigations of the RBNZ's activities are desirable. 

     This list, and the next steps for the review, will be communicated early in

2018. This phase of the review will incorporate the review of the

macro-prudential framework that was already scheduled for 2018, the terms of

reference said.

     The review is being undertaken in line with the policies campaigned by the

New Zealand Labour Party.

     Finance Minister Robertson and interim RBNZ Governor Grant Spencer also

signed policy targets statement Tuesday which was unchanged from the previous

one.

     "The PTA requires the Reserve Bank to keep future CPI inflation outcomes

between 1 per cent and 3 per cent on average over the medium term, with a focus

on keeping future average inflation near the 2 percent target midpoint," the

RBNZ said in a statement.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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