Submission to the New Zealand House of Representatives' Finance and Expenditure Committee - Inquiry into the Future Monetary Policy Framework

New Zealand's operationally independent Reserve Bank should remain focused on achieving its primary objective of stability in the general level of prices. This should be under widely accepted flexible inflation targeting conditions and without distraction from at best temporarily effective “additional measures”. It is the responsibility of fiscal policy to maintain, and in the near team further enhance, a “disciplined fiscal approach to help the Governor achieve the outcomes in the [May 2007] PTA.” The other key elements of economic policy need to be focused firmly on supporting considerably enhanced productivity gains and non-tradable goods inflation outcomes, ahead of the next sustainable business cycle upturn