By this time, many people, again both inside the central bank and outside it, were coming to believe not only that inflation could be kept inside a 0 to 2 per cent target, but also that keeping inflation within the target was not such a difficult job after all.
Economic growth was among the fastest in the OECD; inflation was within the target; New Zealand dollar 10 year bond rates were marginally lower than the yields on 10 year Treasuries (in the first part of 1994). It all seemed pretty easy. In the year to June 1995, underlying inflation increased to 2.2 per cent, outside the target for the first time since 1991.