Reserve Bank of New Zealand Amendment Act

Monetary policy reform

As a result of the Review of the Reserve Bank, monetary policy reform was enacted in 2018 by the Reserve Bank of New Zealand (Monetary Policy) Amendment Act. “Supporting maximum sustainable employment” was added to the economic objectives for the Reserve Bank and a Monetary Policy Committee (MPC) was created with responsibility for formulating monetary policy.

The remit, charter and code of conduct are key components of the monetary policy reform. The remit provides the Monetary Policy Committee (MPC) with its operational objectives, consistent with the economic objectives in Section 8 of the Reserve Bank of New Zealand Act (1989). A replacement remit came into force on 1 March 2021.

The MPC is bound by its charter and code of conduct. The charter provides directions on decision making procedures, transparency and accountability. The code of conduct sets out minimum standards of ethical and professional conduct that must be adhered to by members of the committee.

Remit

Monetary policy plays an important role in supporting the Government’s economic objective. The Reserve Bank of New Zealand Act 1989 (the Act) requires that monetary policy promote the prosperity and wellbeing of New Zealanders, and contribute to a sustainable and productive economy. Monetary policy contributes to public welfare by reducing cyclical variations in employment and economic activity whilst maintaining price stability over the medium term.

This remit is issued by the Governor General to the Monetary Policy Committee (MPC) under Clause 6, Schedule 2 of the Act.

The current remit for the MPC can be found on the Reserve Bank of New Zealand website. (PDF, 364 KB)

Charter

The Monetary Policy Committee (MPC) is responsible for formulating monetary policy directed at achieving the economic objectives of price stability and support of maximum sustainable employment, as set out in section 8 of the Reserve Bank of New Zealand Act (1989) (“the Act”) and in accordance with the remit. This charter aims to facilitate effective decision making by the MPC and ensure transparency of these decisions and the decision-making process, in order to aid the effectiveness of monetary policy and hold the MPC accountable.

The Charter was amended in March 2021 to account for the replacement remit which came into force on 1 March 2021.

The Monetary Policy Committee Charter can be found on the Reserve Bank’s website. (PDF, 158 KB)

A copy of the Reserve Bank of New Zealand (Monetary Policy) Amendment Bill is available at the New Zealand Legislation page. Royal Assent, the final stage in legislating the Act, was undertaken on 20 December 2018.

Code of conduct

The code of conduct of the MPC sets out minimum standards of ethical and professional conduct that must be adhered to by members of the Committee. It was approved by the Reserve Bank Board on 19 February 2019. It can be found on the Reserve Bank website. (PDF, 502 KB)

Further information on the monetary policy framework is available on the Reserve Bank’s website.

Key documents featuring substantive policy decisions

Proactively released information, speeches, media releases, and announcements are all available at the Treasury Reserve Bank Act Review proactive releases, speeches and announcements page.