13 Sep 2012

Bollard defends Reserve Bank's focus on inflation

8:38 pm on 13 September 2012

Outgoing Reserve Bank governor has defended the bank's single-minded focus on inflation in the face of criticism from Opposition parties.

In his last act, Alan Bollard on Thursday kept the Official Cash Rate at 2.5%, before facing questions from MPs at Parliament's finance and expenditure select committee.

In its September monetary policy statement, the Reserve Bank said there was still enough economic uncertainty to keep the level of interest rates unchanged.

At the select committee, Dr Bollard rebuffed suggestions from Opposition parties that the Reserve Bank Act should be changed to give the bank more flexibility.

Dr Bollard said he believed he represents the mainstream view on how central banks should operate, but acknowledged that some economists believe central banks should move away from a prime focus on inflation.

Dr Bollard is leaving his position to become the Executive Director of the APEC Secretariat for a fixed term of three years. He starts on 1 January next year.