Reserve Bank Governor plans to keep inflation in line with PTA

By NZPA

Monday 25th November 2002

New Zealand's new Reserve Bank Governor has signalled he intends to keep inflation close to that seen over the last decade.

In his first public speech as governor, Alan Bollard told a group of Rotarians in Wellington that he was committed to delivering a trend rate of inflation in line with the one to three percent range agreed between the bank and the Government in September.

New Zealand's inflation rate has averaged 1.9 percent over the past 10 years, and 2 percent in the 1990s.

Dr Bollard said the key change in the new inflation target was that it had been defined in terms of future inflation on average over the medium term.

As a result, the bank was freed up to be more forward looking, and barring a surprise event, he expected to give more attention to the outlook for consumer price index inflation over the next three or so years.

"If the outlook for trend inflation over that period is inconsistent with the target, we will adjust the official cash rate. Our intention will be that projected inflation will be comfortably within the target range in the latter half of the three year period."

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