Inflation targeting and monetary policy in practice: the experience of RBA and RBNZ

Renee Fry-McKibbin and C. John McDermott

Chapter 29 in Research Handbook on Inflation, 2025, pp 592-608 from Edward Elgar Publishing

Abstract: This chapter examines the implementation of inflation targeting and monetary policy by the Reserve Bank of New Zealand (RBNZ) and the Reserve Bank of Australia (RBA). It highlights the evolution of monetary frameworks, the mandates and tradeoffs, and governance arrangements since the adoption of inflation targeting. New Zealand was the first to adopt this regime in 1990, followed by Australia in 1993. The chapter discusses the challenges faced by both countries in hitting inflation targets, including the use of unconventional monetary policies during the COVID-19 pandemic. The analysis also covers recent reviews and reforms of the monetary policy frameworks in both countries, emphasizing the lessons learned and the ongoing adjustments to enhance the effectiveness of monetary policy. The chapter concludes by reflecting on the robustness of current frameworks in addressing future economic shocks such as climate change, supply chain disruptions, and technological advancements.

Keywords: Inflation targeting; Reserve Bank of New Zealand; Reserve Bank of Australia; Unconventional monetary policy (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035327751
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