The Reserve Bank (RBNZ) is conceding that the current inflation pressures could have been lessened if it had tightened monetary policy earlier last year. However, it says while monetary policy decisions have been consistent with the economic data available at the time, "with the benefit of hindsight, it appears that monetary policy should have been tightened earlier in 2021". "Like the Reserve Bank, none of the other main forecasters in New Zealand foresaw the strong inflation increases that have occurred since early 2022. Reserve Bank Chief Economist Paul Conway says “the current heightened level of inflation could have been lessened at the margin by an earlier tightening in monetary policy in 2021. While RAFIMP covers the Monetary Policy Committee’s decisions on the Official Cash Rate (OCR), it also includes new Additional Monetary Policy (AMP) tools that were introduced during the pandemic.
