I have great respect for Dr Bollard as an economist – however I do realise that he can be a touch dovish.

I think that ultimately the credibility of the RBNZ depends more on its institutional structure than who is leading it. If Dr Bollard was told that his sole mandate was inflation – and judged solely in that regard I think he would act very differently. After all, it is all about the incentive stipulated in his contract!

You’re dead right that RBNZ has ignored its statutory mandate; it instead seems to be in collusion with the government to subvert its mandate. If the RBNZ wants to get credibility back as an inflation-fighter, it has to get rid of Bollard. I hope he’s quick to the chopping block if there’s a change in government.

I am very much in the same camp as you here – growth is not, and shouldn’t be part of their mandate.

However, when looking at what the Reserve Bank will do rather than what they should do it becomes obvious that the Bank places some weight on growth and “stabilisation” (a term I find a bit funny to use in the face of shocks to AS).

The funny thing is, non-tradable inflation is still over 3% – in fact its currently rising at a faster rate than tradable inflation. I have a bad feeling about New Zealand’s (and the worlds) inflation outlook.

We had five quarters beginning September 2005 where CPI exceeded the RBNZ target band. During that period, inflation was entirely driven by non-tradeables. This time round, it’s going to be harder ’cause import prices are helping to fuel CPI rather than attenuating the effects of domestic pressures. How many bouts like this beyond the targets threshold before the RBNZ loses credibility?