Transition to Inflation Targeting: is the New Zealand Experience Useful?
Keywords:
monetary policy, inflation targeting, inflation expectations, official cash rate, Trade Weighted Index, Large-scale asset purchases, Urgent lending practiceAbstract
The article examines the New Zealand experience of the transition to inflation targeting. In particular, the necessity and reasons for New Zealand’s transition to this regime were analyzed. When adjusting inflation expectations, the Reserve Bank’s activities in cooperation with the government were taken into account. The influence of the official cash rate on market rates was also studied. In addition, the exchange rate of the “Comfort zone” and the “Trade Weighted Index” were studied as part of the monetary policy. As part of open market operations, the Reserve Bank’s “Quantitative easing” instruments were analyzed.
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