But as my counterpart at the Bank of England, Mervyn King, recently observed in reviewing the performance of their Monetary Policy Committee, “Institutions matter.” What our inflation targeting regime has done is to give the initial political commitment to price stability a degree of durability that transcends the particular politicians or central bankers in place in 1989 when the RBNZ Act was passed into law.
The framework has shifted the incentives from an acceptance of inflation arising from all the familiar pressures towards a more robust resistance to any future re-emergence of inflationary tendencies. BIS Review 79/1999  12  REFERENCES Bernanke, Ben S; Laubach, Thomas; Mishkin, Frederick S; Posen, Adam S. 1999. “Inflation targeting. Lessons from the international experience”. Princeton University Press. Brash, Donald. 1999.