It could be argued that the shift in political attitudes towards inflation was, ultimately, the only change that really mattered. We could also argue, reasonably, that the major changes in New Zealand’s monetary policy came with decisions to float the exchange rate and commit to market funding of the Government’s fiscal deficits. To accept those arguments, however, would miss some important points.
Certainly, the political will to adopt a price stability target was an essential pre-requisite to any serious attack on well entrenched inflation.