RBNZ 2% inflation focus may be up for discussion

Bloomberg

New Zealand Finance Minister Grant Robertson said he expects to discuss the central bank’s current focus on the 2 percent midpoint of its inflation target band once a new governor is appointed.
“The most important thing for me is that we continue, and we’ve committed to, keeping the band,” he said in an interview in his Wellington office. “I don’t have a proposal at this stage to change the midpoint, but I’m sure when I
sit down with a new governor
that may be a topic that comes up. It is possible for us to take another look at that when a new governor is appointed.”
Former governor Graeme Wheeler agreed to focus on the midpoint of the Reserve Bank’s 1-3 percent target band when his tenure began in 2012. The 2 percent focus was designed to counter perceptions that the central bank had gone soft on inflation, which had averaged 3 percent in the five years through 2011. Since then, it has averaged 1 percent.
Robertson, who was sworn in little more than two weeks ago after his Labour Party ended nine years of rule by the conservative National Party, plans to shake up the central bank. He will add full employment to the RBNZ’s objectives, creating a dual mandate similar to those of the Federal Reserve or the Reserve Bank of Australia, which he said could result in looser monetary policy in some situations.
The government has set a goal of reducing the jobless rate to 4 percent within its first three-year term, and the RBNZ will have a role to play, Robertson said. The unemployment rate was 4.6 percent in the third quarter, and the central bank projects it will be at 4.4 percent by early 2020.
“We want every part of the economic architecture to be playing its role,” Robertson said. “That includes the central bank. I’m not naive to think they have some magical ability to do that, but we want them to be putting employment, employment outcomes and the overall well-being of New Zealanders right up there.”