Monetary policy has an important, but limited, role to play in providing a reasonably stable backdrop for real economic activity. Against that standard, the flexible inflation targeting approach that has guided New Zealand’s monetary policy for over 20 years served the country relatively well through some very testing times. The strength and length of the boom – and the associated increase in private debt and asset prices - surprised us, and most other economists. And just how tepid the recovery over the past three years has been is perhaps even more of a surprise.