A growing number of central banks, starting with New Zealand in the late 1980s and currently numbering over twenty, embraced the principle of gearing monetary policy almost exclusively to stabilizing inflation. Even where central banks did not target a precise inflation rate, their policy objectives were informed, if not dominated, by price stability. This approach seemed successful.
Just as the country’s strong macroeconomic fundamentals have provided a degree of cushion during past crises, we remain cautiously optimistic that the same factors will serve as the country’s first line of defense and continue to keep the economy afloat amid the current crisis.