As Wheeler's Australian counterpart Glenn Stevens ruefully acknowledged in a speech last week, "It is difficult to avoid the conclusion that in practice it is more difficult than the textbook says it should be for a central bank by itself to create inflation, when other powerful factors are at work.
"For economists and policymakers trained from the 1960s to the 1990s, when the task was always to stop inflation rising and/or to get it down, this is a remarkable outcome."
In this context, economists at the New Zealand Institute of Economic Research, Kirdan Lees and Christina Leung, argue in a paper released this week that the inflation target should be replaced by nominal income growth, for which the best available statistical measure is growth in noninal gross domestic product.
Nominal GDP reflects the combination of real growth in output, and inflation.
It has increased by an average 4.3 per cent a year over the past five years. Lees suggests a target of around 4 or 5 per cent - reflecting real growth of 2 to 3 per cent plus inflation of 2 per cent - would be about right.
The reason for advocating the change is that the nature of the challenge facing monetary policy has changed, he says.
It has traditionally been an exercise in managing aggregate demand, reining it in through higher interest rates when it was outstripping the economy's capacity to supply, and boosting it through lower rates when demand fell short, as it did in the global financial crisis.
But now, Lees argues, the problem is not on the demand side of the economy but the effects of (generally positive) shocks on the supply side.
Globalisation is one source of such shocks.
The addition of billions of people to the global economy and trading system, who previously would have been part of some little village economy of no significance to anyone else, has changed where stuff gets manufactured and the labour costs involved in doing so.
Then there are technological changes.
Fracking has increased the supply of oil and natural gas.
Information technology reduces the costs involved in having a lot of the wrong stuff in the wrong place at the wrong time.
And the internet has empowered consumers in all sort of ways, including the ability to compare prices and buy things online.
Online retailing has trebled in the past five years.
On digital disruption more generally, governor Stevens had this to say: "It's already obvious that [business] models that rely on having an information advantage over a customer are struggling as information becomes ubiquitous. Models that can profit by using more information about the customer will be advantaged - up to the point at which customers decline to reveal any more about themselves. The issue of trust will be key."
These are radical changes which are boosting productivity, efficiency and the competitiveness of markets.
They change the relationship between output and inflation, which is central to the forecasts central banks have to make when setting policy.
The risk in continuing to target monetary policy on inflation is that it treats low inflation as a problem, to be combated by higher doses of monetary stimulus, when it may be that low inflation is the side effect of the changing nature of growth on the productive side of the economy.
Since nominal GDP targeting allows a central bank to shift interest rates when a supply shock hits - including negative ones, like drought - it does a better job of stabilising the economy than inflation targeting does, Lees argues, while being just as good at dealing with demand shocks.
"If you look at the outlook today, there is quite a divergence between where interest rates would be set to meet an inflation target and they would be set to meet nominal income growth."
"We will need materially lower interest rates to meet [the inflation] target of 2 per cent. Inflation expectations are very low and firms are finding it very hard to pass on cost increases," he says.
"But if you look at nominal income growth on the other hand, interest rates are about right, although you might argue we could go a bit lower."
Low interest rates are not an unalloyed good, after all.
A prolonged period of low interest rates risks inflating asset prices and to the under-pricing of risk.
We are seeing both of those effects in the Auckland property market, with house price inflation running at 24 per cent on Quotable Value's measure and house prices at nine times income.
"Right now the Reserve Bank is in a bind: leave rates on hold and miss the inflation target or lower interest rates to hit the inflation target but risk an asset price spiral," Lees says.
The longer the bank falls short of its inflation target, the less credible the target becomes, and credibility is fundamental to a central bank's ability to affect what happens out in the world.
But there are some obvious problems with replacing an inflation target with a nominal GDP target that bundles together growth and inflation.
It could happen that the target is met by the wrong combination of weak growth and high inflation.
It should give us pause that despite some academic interest in the idea of a nominal GDP target, no one has adopted one.
Reserve Bank's Dilemma
• Option 1: Leave interest rates on hold, but miss the inflation target
• Option 2: Cut interest rates to lift inflation, but risk soaring asset prices
