Dual Mandate for RBNZ Could Slow Inflation's Return to Target

Dow Jones
Yesterday

0348 GMT - If Labour Party wins the New Zealand election in November, a widened mandate for the Reserve Bank of New Zealand that includes both low inflation and low unemployment would be likely. Westpac economist Darren Gibbs says the addition on employment imperative would mean little in demand-driven economic cycles where inflation and employment objectives generally move in the same direction. But a supply shock, where inflation rises even as employment falls, forces policymakers to balance competing objectives, he adds. A restored dual mandate could result in a slightly slower return of inflation to target, and a slightly lower peak interest rates, he says.

 

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