Monetary policy objectives- price stability and macro stabilisation
Christie Smith () and
Additional contact information
Omar Aziz: Reserve Bank of New Zealand, http://www.rbnz.govt.nz
Reserve Bank of New Zealand Bulletin, 2019, vol. 82, No 2, 14 pages
As of 2018, the Reserve Bank of New Zealand has a dual mandate for monetary policy focused on targeting price stability and supporting maximum sustainable employment. In this article, we discuss the Bank’s policy objectives in a broader historical context, illustrating how the aims and objectives of monetary policy have varied over time in response to pressing societal issues. The emphasis of this Bulletin article is on the objectives of monetary policy. Monetary objectives are one component of a wider set of legislated, economic objectives determined by government. Notwithstanding central bank independence, there has often been significant interplay between monetary objectives and the macro objectives set for fiscal policy. Monetary policy objectives have also fluctuated between two orientations. First, providing a stable unit of account and predictable monetary framework to facilitate private transactions. Second, proactively using monetary policy to shape the allocation of real resources to improve welfare. Inflation targeting represents a middle ground between these two orientations. In sections 2 and 3 of this article, we discuss the history of central bank objectives leading up to the development of dual mandates. The key message from these sections is that monetary policy objectives have evolved over time, reflecting different societal needs, evolving empirical experience and theoretical insights. In section 4, we outline why price stability and macroeconomic stabilisation are common objectives for monetary authorities and discuss the interplay between monetary objectives and theoretical insights over time. Section 5 concludes.
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.rbnz.govt.nz/-/media/ReserveBank/Files ... 19/rbb2019-82-02.pdf
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nzb:nzbbul:apr2019:2
Access Statistics for this article
More articles in Reserve Bank of New Zealand Bulletin from Reserve Bank of New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Reserve Bank of New Zealand Knowledge Centre ().