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...

Subscribe to BusinessDesk

Stay informed on business, government and financial developments across New Zealand.

Deeply researched, twice-edited and fact-checked news
Annual subscribers also receive a complimentary subscription to The Wall Street Journal
Personalised email news alerts, plus gift up to 5 stories a month to non-subscribers

You can cancel anytime with two clicks, an email or a phone call.
Find out more.

We are serious about journalism.

Name {{ registerForm.errors.get('name') }}

Email address {{ registerForm.errors.get('email') }}

Phone Number {{ registerForm.errors.get('phone') }}

Job Title {{ registerForm.errors.get('title') }}

Password Minimum password length of 8 characters.
Require at least one upper and lowercase, numeric, and special character. {{ registerForm.errors.get('password') }}

Repeat password {{ registerForm.errors.get('password_confirmation') }}

We had trouble validating your card. It's possible your card provider is preventing us from charging the card. Please contact your card provider or customer support.

Credit Card

Cardholder's name

{{ __(plans[index].name) | capitalize }} {{ plans[index].attributes.old_price | currency }} {{ plans[index].price | currency }}

All subscriptions auto renew but are easy to cancel.

I Accept The Terms Of Service

{{ registerForm.errors.get('terms') }}

Tax: {{ taxAmount(selectedPlan) | currency }}

Total Price Including Tax: {{ priceWithTax(selectedPlan) | currency }} {{ selectedPlan.type == 'user' && spark.chargesUsersPerSeat ? '/ '+ spark.seatName : '' }} {{ selectedPlan.type == 'user' && spark.chargesUsersPerTeam ? '/ '+ __('teams.team') : '' }} / {{ __(selectedPlan.interval) | capitalize }}

On the Money

On The Money: Browns, beards, big cheeses, and more

Recognising the ‘basic little people’ and other little things OTM noticed this week.

Dileepa Fonseka 5:00am

World

The new scramble for Africa

The competition for influence will shape the continent’s future. Will the US join?

The Wall Street Journal 5:00am

Media Opinion

A 100% tariff on movies. What does that even mean?

"We should underestimate Trump at our own peril."

Bloomberg 5:00am

A 100% tariff on movies. What does that even mean?

Sponsored

Ready for the C-Suite leap?

Part-time programme. Full-time leadership transformation.

University of Auckland Business School

Sponsored

Active beats passive in tough times

Agile investing responds faster to market shocks and shifts.

Milford

More Economy

Economy

Westpac adds another rate cut to its forecasts

Westpac Bank now expects the official cash rate (OCR) to trough at 3% and has pushed back the timing of its forecast tightening cycle.“Downside risks from global growth suggest the RBNZ [Reserve Bank of New Zealand] may continue easing beyond May,” chief economist Kelly Eckhold s...

Rebecca Howard 09 May 2025