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The 2012 Policy Targets Agreement: an evolution in flexible inflation targeting in New Zealand

Ross Kendall, Tim Ng

The Policy Targets Agreement (PTA) frames monetary policy conduct. It sets out New Zealand's approach to 'flexible' inflation targeting, which seeks to maintain price stability over the medium term while accommodating, to some degree, shocks that can cause unnecessary economic volatility. A new PTA took effect in September 2012 with the appointment of Governor Graeme Wheeler. This article discusses the new PTA and how the changes fit within the overall monetary policy framework.