RBNZ Plans to Return Cash Rate to Neutral Level of 2%: Orr

The transcript discusses the Kansas City Fed's symposium in Jackson Hole, focusing on market expectations for Fed Chair Powell's statement on bond tapering. It explores the global economic environment, emphasizing the need for monetary policy normalization. The conversation highlights the history of inflation targeting and the current credibility issues faced by central banks. Reflections on past policy mistakes and the least regrets framework are shared, along with the impact of exchange rates and economic pressures on policy decisions. Finally, future interest rate projections and the concept of a neutral rate are discussed.

What is the primary focus of the Kansas City Fed's symposium in Jackson Hole?

• Discussing global trade agreements

• Reviewing technological advancements in banking

• Analyzing the impact of climate change on economies

• Exploring the potential bond tapering by the Fed

Which central bank was the first to adopt inflation targeting?

• Federal Reserve

• European Central Bank

• Reserve Bank of New Zealand

• Bank of England

What shift in inflation targeting is being observed among major central banks?

• From inflation targeting to GDP targeting

• From average inflation targeting to explicit targets

• From explicit inflation targeting to average inflation targeting

• From inflation targeting to employment targeting

What is the 'least regrets' strategy in central banking?

• A strategy to minimize regret by avoiding any policy changes

• A strategy to focus solely on inflation control

• A strategy to ensure maximum economic growth

• A strategy to balance risks and act without waiting for certainty

Why is the Reserve Bank of New Zealand's policy closely watched by other central banks?

• Because it is the largest central bank in the world

• Because it has the highest interest rates globally

• Due to its unique approach to digital currencies

• Due to its pioneering role in inflation targeting

What is a potential effect of the Fed announcing a tapering on New Zealand's currency?

• It might weaken the New Zealand dollar

• It might cause the New Zealand dollar to fluctuate wildly

• It might strengthen the New Zealand dollar

• It might have no effect on the New Zealand dollar

What is considered a 'neutral' interest rate in New Zealand?

• 1% nominal

• 2% nominal

• 3% nominal

• 4% nominal