We aim to keep inflation low and stable and contribute to maximum sustainable employment. This is the best we can do as a central bank to promote economic wellbeing. We have the one main instrument – the interest rate lever or price of money – and we use this tool with our best view of what’s on the horizon.
We provide forward guidance on our expected activity, but remain flexible to incoming data. Monetary policy remains as effective as ever, and for small open economies like New Zealand, the exchange rate plays a significant additional role in competitiveness.