The Reserve Bank wants to know if it has the right inflation target and whether it should consider climate change and inequality when it sets interest rates.
Westport is among several areas affected by more severe storms as part of climate change which is a topic the Reserve Bank is seeking public feedback on. Photo: Supplied/NZ Defence Force
It has started its five-yearly review of its remit, as set out by the government, which currently requires the Monetary Policy Committee to keep annual inflation between 1 and 3 percent, support maximum sustainable employment, and consider how its decisions will affect the rest of the financial system.
"The Reserve Bank is seeking feedback to ensure that the remit framework is the best it can be for our legislative purpose, and ultimately the prosperity and wellbeing of all New Zealanders," RBNZ governor Adrian Orr said in a statement.
RBNZ chief economist Paul Conway said he wanted the public to submit their views on a range of issues.
"Do people think the inflation target is about right? How should we go about supporting maximum sustainable employment? How relevant are major economic trends under public discussion, such as house price sustainability, distributional outcomes or climate change?"
During a media conference, Reserve Bank staff were asked directly if they thought the remit should consider wider economic issues such as inequality, climate change and house prices.
RBNZ manager of policy research and development Gael Price replied: "Having carefully reviewed international experience and looking at best practice we have found that these additional considerations, while not harmful, tend to have ambiguous effect on success overseas".
The RBNZ position was that focusing on the main mandate goals was important, she said.
On the specific issue of sustainable house prices, which was added to the remit by the minister of finance in March 2021, Price said "the monetary policy remit isn't the necessarily the best place to include those concerns".
She said broader economic issues possibly belonged in another document, such as the letter of expectations, which the government sent to the RBNZ every year, or the financial policy remit, which considered matters as they related to financial stability.
RBNZ economic advisor Ashley Dunstan added that while the bank did not necessarily think it was appropriate to include those considerations in the remit, it was doing a lot of work to understand what house price sustainability and climate change would mean for the economy in the future.
Public consultation on the remit runs from 1 June until 15 July.
The feedback would be used to narrow down options for the future remit and the advice will be passed on to the Finance Minister in 2023.