The Reserve Bank's inflation target conundrum

As the costs of getting rid of inflation mount, is the RBNZ's 2% target still appropriate? (Image: NZME)

Thu, 25 Apr 2024

Is 2%, or a 1-3% target range for inflation, still the appropriate objective for the Reserve Bank of New Zealand? That question could well be asked more and more as the costs of getting rid of inflation mount. As the Reserve Bank of NZ (RBNZ) governor has noted, “the last few yards may be very difficult”.Inflation in NZ has come in hotter than expected, with non-tradable inflation still an eye-watering 5.8%. But it is also clear we are now entering the breaking of bones stage of the disinflation process.Getting inflation down i...

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