Mr Robertson's first press conference yesterday signalled to financial markets the new Government remained committed to predictable monetary policy, but the second phase of the review was less detailed and appeared to rule out any review of the exchange rate.
In a formal ceremony with acting Reserve Bank of New Zealand governor Grant Spencer, the existing policy targets agreement (PTA) was signed. The PTA puts inflation targeting at the heart of monetary policy until a review and legislation to alter that focus is completed next year.
Westpac chief economist Dominick Stephens said a two-phase review of the Reserve Bank was being planned. The first stage was ''no surprise'' and ''exactly matches'' the Labour Party's election manifesto on the Reserve Bank.
''This part of the review is charged with executing Labour's plan to give the Reserve Bank a dual mandate of employment and inflation, along the lines of the US and Australia, and introducing a committee for making monetary policy decisions, structured similar to the Bank of England's committee,'' he said.
The review's phase two was broader, and the details were not yet known.
Mr Stephens said the Reserve Bank and Treasury would prepare a list of the central bank's functions to be reviewed, including its macroprudential policy.
''We can't anticipate what phase two will cover, but at the press conference the Minister of Finance was quoted as saying that he had no desire to include the exchange rate in the review.''
The intention is to complete the review by March, when a new governor will be appointed.
Mr Stephens said the exchange rate comment would be seen as positive by those who favoured orthodox monetary policy, and he believed it was why the New Zealand dollar subsequently rose 0.7%.
''Presumably, as markets were able to rule out actions specifically designed to lower the exchange rate,'' he said.
Mr Robertson said the Government would shortly announce an independent expert review panel to study the Reserve Bank's current monetary and financial stability practices. It would first insert an employment focus into the PTA and implement monetary policy decision-making by committee rather than vesting that responsibility in the governor alone, BusinessDesk reported.
Mr Robertson reaffirmed the importance of the Reserve Bank retaining its operational independence and said the Treasury would lead the official work on reviewing its activities.
Mr Robertson faced repeated questioning during the media conference on whether the inclusion of an employment target could be expected to lead to lower interest rates, but acknowledged that current low unemployment, high workforce participation and emerging signs of higher inflation could have the opposite effect.
''There are many, many different scenarios that could occur,'' he said. - Additional reporting: BusinessDesk
