For many years we have pursued a highly expansionary monetary policy stance. During that time, monetary policy has also become quite unconventional; we have deployed a range of different non-standard measures. But now, markets, banks and savers are waiting for it to become more conventional again. And there’s no doubt that monetary policy will return to normal. The question is when.
In making that assessment, we could place a high weight on the shifts in political priorities which dated from July 1984, on the sweeping reforms that have occurred generally in New Zealand’s macro and micro policies, or on the shift in our trading partners’ inflation performance.