RBNZ Says Monetary Policy Approach In Line With New Fed Strategy

The Reserve Bank of New Zealand sees parallels between the U.S. Federal Reserve’s new monetary policy strategy and its own approach, which allows inflation to run above target for a time after periods of weakness, Assistant Governor Christian Hawkesby said.

“Our observation is that the U.S. Federal Reserve implementing its approach through ‘flexible average inflation targeting’ has a number of parallels with the Monetary Policy Committee’s stated preference to take a ‘least regrets’ approach to achieving its inflation and employment objectives,” Hawkesby said in response to written questions from Bloomberg News. “That is, if inflation has been below the mid-point of the target range for a time, the Committee’s least regret is to set policy where inflation might spend some time above the mid-point of the target range in the future.”