Finance Minister Bill English and incoming Reserve Bank Governor Graeme Wheeler have signed a new agreement, which sets out specific targets for maintaining price stability.
The new policy targets agreement takes effect on 26 September, when Mr Wheeler starts his five-year term as Governor, replacing Alan Bollard.
The agreement continues to require the Reserve Bank to keep Consumer Price Index inflation between 1% and 3% on average over the medium term.
Within the target, the new agreement now requires the bank to focus on keeping future average inflation near 2%.
Mr English says the existing policy targets agreement have served New Zealand well and there are benefits in maintaining consistency.
