Five Million Voices

Should the Reserve Bank's mandate be changed to focus solely on price stability by removing the maximum sustainable employment objective?

The Bill amends the Reserve Bank of New Zealand Act 2021 to remove the maximum sustainable employment objective, leaving the Reserve Bank with a single economic objective of achieving and maintaining price stability.

⚡ Taken under urgency

Parliament advanced this bill under urgency (committee of whole house, first reading, second reading, third reading) — moving it through faster than usual, with less time than normal for public submissions.

MPs’ arguments for and against the bill

Why support it
  • Supporters argued that focusing the Reserve Bank on a single price-stability objective makes monetary policy clearer and removes the risk of the two objectives being misaligned in rare circumstances.
  • Supporters said the dual mandate affected perceptions of monetary policy's effectiveness, and that clear inflation-focused signals help anchor market expectations.
  • Supporters argued that price stability is the foundation for sustainable employment, and that controlling inflation is necessary to address cost-of-living pressures.
Why oppose it
  • Opponents argued the change is a solution in search of a problem, saying there is no evidence linking a central bank's mandate to how quickly it responds to inflation, and that inflation expectations had not shifted under the dual mandate.
  • Opponents said a single mandate risks more frequent interest rate rises and removes a focus on keeping people in jobs, pointing to employment's role during COVID and past official cash rate decisions.
  • Opponents criticised the absence of select committee scrutiny and public submissions, arguing the change was rushed and that statutory framework changes may themselves trigger market concern.

These are claims MPs made in Parliament’s debate — not verified facts.

Full bill summary & link to official bill page

This bill amends the Reserve Bank of New Zealand legislation to narrow the central bank's monetary-policy goal to a single focus on price stability — that is, keeping inflation low and stable. It removes the additional objective of supporting maximum sustainable employment, so that when the Reserve Bank sets the official cash rate (the main interest-rate lever), it concentrates solely on controlling inflation. It affects how monetary-policy decisions are framed and justified.

It is a government bill delivering a coalition commitment, and it reverses a 2018 change that had added an employment objective, creating what was known as the dual mandate. The argument in favour is that a single, clear inflation target keeps the bank focused and accountable, and that stable prices are the best long-run contribution monetary policy can make to jobs anyway. The argument against is that a dual mandate rightly weighs the human cost of unemployment, and that dropping it risks the bank tolerating higher joblessness in order to fight inflation.

See the Parliament.nz ↗ site for the full bill.

Oppose (No) Support (Yes)

Reserve Bank of New Zealand (Economic Objective) Amendment Bill · Second Reading, 12 Dec 2023
Parliament voted 67–54 — it passed.