“This dual mandate is similar to that of countries such as the United States, Australia and Norway and underscores the importance of monetary policy as an instrument to support the real and productive economy,” said Grant Robertson. Once inflation was brought under control, the reserve bank began to focus more on the medium-term inflation outlook. This has allowed for greater monetary policy flexibility to stabilize the real economy. It also took into account delays in the transmission of monetary policy with regard to the influence on inflation and allowed inflation to deviate from the target for short periods of time. It should be noted that, unlike a number of other central banks whose monetary interest rates have fallen from almost zero (or lower) and which cannot lower interest rates further to further ease monetary policy, the official cash reserve bank rate remains at a level (1.75%) monetary policy if conditions require it. In a speech in early March 2017, the governor of the reserve bank stated that “risks associated with future OCR movements are considered to be weighted in the same way.”  17. In line with the initial demand to reduce inflation to the target of 0-2% by December 1992, the Bank announced in its April 1990 monetary policy statement a number of indicative areas for inflation in order to facilitate the transition to price stability. The indicative sectors were 3 to 5% in December 1990 and 1.5 to 3.5% in December 1991. When the horizon for achieving the 0-2% target was extended until December 1993, In February 1991, the Bank announced a slightly slower path to reduce inflation, with indicative ranges of 2.5 to 4.5% for the year up to December 1991 and an indicative range of 1.5 to 3.5% in December 1992. The provisional indicative sectors reflect the Bank`s desire for a gradual reduction in inflation to the range of 0 to 2%, convinced that a severe disinflationary process could impose considerable costs on the economy. The release of the interim guidelines also provided additional internal disciplines to assist the Bank in making its monetary policy decisions during this period.
18. Given the role of reserves in the ATP, the Bank began to calculate an inflation index known as “subliminal inflation” to adjust the effects of interest rates, housing costs and one-off price shocks. The underlying measure of inflation was published by the Bank each time Statistics New Zealand`s quarterly CPI was published, and the Bank based its monetary policy decisions on changes in the underlying inflation level and not on the so-called pivotal rate. In the early 1990s, for example, adjustments were made to the consumer price index to avoid the effects of changes in interest rates and the effects of changes in public levies. The Bank has shown that it does not take into account the direct impact of these one-off influences on the consumer price index and instead focuses monetary policy on medium-term inflation, i.e. the underlying inflation rate. However, as it became increasingly clear in subsequent years, the calculation of underlying inflation posed difficulties in determining inflows or exclusions from positions. This has sometimes resulted in arbitrary demarcations to determine when items should be included or excluded in the calculation of underlying inflation, and have tended to err on the face of accuracy. These issues will be discussed later in this paper. Proponents of an inflation-oriented monetary policy argue that central banks tend to understand these supply shocks when defining monetary policy.
They also take into account the broader effects of monetary tightening or easing on the economy. It may also be difficult to communicate why the official cash rate is kept at the same level in the event of significant changes in the