RBNZ Governor Adrian Orr has decided to avoid expectations that he would be soft on inflation, as a new policy agreement signed with the government to include the goal of "maximizing sustainable employment".
The new mandate will take the sole governor's authority and give it to the MPC with greater transparency in decision-making, keeping the inflation target between 1-3% with a focus on keeping it near the middle of that range at 2%.
A major focus on employment is a shift for the Reserve Bank of New Zealand, which in 1989 was the first central bank to adopt an official inflation target, and meets the new promise of a new Labor-led government to promote job creation.
Many analysts believe the new mandate will likely not change the central bank's bias in the near term as interest rates are expected to remain at least 1.75 percent until the end of this year.
