A review of the Reserve Bank's monetary policy decisions over the past five years has found they are consistent with the data available when those decisions were made.
The 122-page Review and Assessment of the Formulation and Implementation of Monetary Policy (RAFIMP) is a detailed report card on what the Monetary Policy Committee (MPC) decided to do, what worked, what it could have done better and lessons learned.
The review, which was conducted by the Reserve Bank, also found its decision to ease monetary policy during the COVID-19 pandemic was warranted and worst-case economic scenarios were avoided.
However, central bank chief economist Paul Conway said the heightened level of inflation could have been lessened by an earlier tightening in monetary policy.
"The last five years were uniquely challenging," according to the report.
"In particular, COVID-19 was a highly disruptive shock. Monetary policymakers were faced with widespread uncertainty."
It identified nine areas for improvement, around policy design, capability building and informing the research agenda.
The report is broken into three periods, with the first covering the period between 2017 and 2019 when inflation was below the central bank's 1 to 3 percent target, followed by the 2020 initial response to the pandemic, and from 2021, when inflation rose above the target.
The RAFIMP was conducted by the central bank, but was peer reviewed by international experts including Australian National University professor Warwick McKibbin, and former Bank of Canada deputy governor Lawrence Schembri.
The review became a legal requirement in 2018, although the RBNZ said it also carried out regular reviews of monetary policy.
The review covers the MPC's decisions on the official cash rate (OCR) and additional monetary policy (AMP) tools introduced during the COVID-19 pandemic.
RNZ
