The past few years have seen the emergence of persistent core inflation off the back of the COVID-19 pandemic. Tackling these persistent inflationary pressures and bringing levels of ‘core’ inflation in line with our 1 to 3% target is an important part of bringing inflation back down to the 2% midpoint. In this context, a flexible approach to inflation targeting, with a medium-term focus, remains appropriate. This provides the Monetary Policy Committee with the ability to weigh different considerations when responding to shocks to the economy. The Reserve Bank believes that the current 2% mid-point inflation target ... (full story)