The Reserve Bank of New Zealand (RBNZ) has added a jobs mandate to the Policy Target Agreement (PTA), an update to the central bank's policy targets that is signed each time a new Governor of the RBNZ is brought on board. Adrian Orr will be taking over the helm of the RBNZ effective on the 27th, this Tuesday, and he brings with him an updated PTA mandate that includes employment.
Adding an employment byline in the PTA has been anticipated for a while, and the move brings the RBNZ's structural targets in-line with that of the US Fed. The RBNZ's inflation target remains unchanged, resting at the 2% midline of the 1-3% band, and governing decisions will now be partially made by a cyclical committee of advisors, rather than resting solely on the shoulders of the Governor.
Key details:
- The Policy Target Agreement will continue to seek inflation at the 2% midline.
- Decisions at the helm will now be made by a voting committee instead of relying soley on Governor's discretion.
- Voting committee to come into effect sometime in 2019.
- RBNZ will be responsible for maintaining/improving sustainable employment.
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