Academic journal article The Reserve Bank of New Zealand Bulletin

Editor's Note

Academic journal article The Reserve Bank of New Zealand Bulletin

Editor's Note

Article excerpt

In May last year, the Government initiated a review of the New Zealand monetary policy framework. Professor Lars Svensson of Stockholm University was appointed to conduct the review. Professor Svensson's report was released on 28 February and the executive summary and recommendations of the report are published in this edition of the Bulletin. A copy of the complete report can be accessed on the Reserve Bank's website.

Among the recommendations made by Professor Svensson, are that:

* a committee of five persons (all Bank staff) be assigned responsibility for monetary policy, replacing the existing structure whereby the Governor is the sole decision-maker, to take effect from the end of the Governor's current term of office (in August 2003);

* the Policy Targets Agreement be amended to provide for a point target of 1.5 per cent, with explicit reference to it being a medium-term target, again, to take effect from the end of the Governor's current term of office;

* the Board comprise only non-executive directors and be chaired by a non-executive director (rather than by the Governor, as at present).

The Government has announced that it expects to make decisions on the recommendations made by Professor Svensson by the end of May. …

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