Over the past 18 months, inflation in New Zealand has been surprisingly low, even as GDP has strengthened and many measures of excess capacity in the economy have tightened largely as expected. Unexpected strength in the New Zealand dollar, which has reinforced strong domestic and international...

Transmission mechanisms are the channels through which monetary policy affects macroeconomic variables, such as GDP and inflation. Differences in transmission mechanisms can generate asymmetric behaviour among currency union partners when they experience shocks. This has the potential to widen...

Inflation expectations play an important role in shaping the inflation consequences of economic activity. Hence, they are of special importance for monetary policy. Survey measures of inflation expectations are available, but whether they are a good representation of true beliefs is a moot...

Inflation pressures in other economies have important implications for inflation, activity and monetary policy in New Zealand. This article examines inflation trends in New Zealand’s trading partner economies over the past decade. Looking at a range of inflation measures, we observe that the...

For most of the period since 1994, the target range for annual Consumers Price Index (CPI) inflation, established by the Policy Targets Agreements (PTA), was 0 to 3 per cent. Over this period, actual CPI inflation has averaged 2 per cent. As one might expect, analysis shows that our medium-term...