Reserve Bank urged to abandon inflation targeting policy by NZIER

Tue, 01 Dec 2015

By Edwin Mitson Dec. 1 (BusinessDesk) - The Reserve Bank should abandon targeting inflation because the 25-year-old policy is no longer fit for purpose in the modern economic environment, the New Zealand Institute of Economic Research says. The Reserve Bank adopted the then-radical policy in the early 1990s to try to ensure stable prices. However in 2015, it finds itself in a difficult position of whether to leave interest rates on hold at 2.75 percent and miss its inflation target, or lower interest rates but risk a sharp rise in asset...

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