Abstract

A decade ago, during the course of 1989, the New Zealand Parliament devoted considerable time and intellectual energy to the consideration of the Reserve Bank of New Zealand Bill, later to become the Reserve Bank of New Zealand Act 1989. That Act completely re-wrote the RBNZ’s charter. The bulk of the Act – indeed almost half of its 192 clauses- relates to prudential supervision. While the prudential material is interesting in its own right, I won’t be dwelling on it in this address. Rather, I will concentrate on the origins of our inflation targeting regime, its evolution, and an assessment of our experience with it over the past decade. The origins of the 1989 Act lay primarily with Roger Douglas. Around the middle of 1986, with memories of the 1984 election debacle still deeply etched in his mind, Douglas initiated

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