KEY POINTS:
Finance Minister Michael Cullen has reappointed Reserve Bank governor Alan Bollard for a second five-year term.
Dr Cullen said he and the governor had signed an unchanged Policy Targets Agreement (PTA). His term had been extended to September 2012.
Dr Cullen and Dr Bollard said in a joint statement the operation of monetary policy and the mechanisms for achieving the target could change as a result of a parliamentary select committee inquiry into monetary policy.
They could agree to amend the PTA at that time, they said.
"Alan has demonstrated his integrity and outstanding general management skills in performing his duties as governor over the past five years so I am pleased to accept the Reserve Bank board's recommendation to reappoint him for another five year term," said Dr Cullen.
He and Dr Bollard agreed that the current PTA "continues to ensure transparency and provides an appropriate basis for accountability in the conduct of monetary policy".
The Reserve Bank's sole monetary policy objective is to keep inflation between one and three per cent -- an objective that was not met for five quarters from September 2005.
However, the bank is permitted to allow inflation to go outside its target band if there are extenuating circumstances, such as the oil price shock that occurred in that period.
Dr Bollard said he was pleased to accept another term.
- NZPA
