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... envisage any negative impacts of using this instrument that may have a long-term consequence? Is there a better way to bring inflation down in a small open economy such as New Zealand? On the basis of your analysis, do you agree or disagree with the above quotation? Or, do you feel that we need to conduct further research in certain areas to be able to appreciate the challenges faced by the current monetary policy regime? The Official Cash Rate (OCR) is a tool of the monetary policy to control the inflation rate. It increases the interest rate so that consumers would save more money in banks and spend less money, thus decreasing the inflation rate. The OCR is set by the Reserve Bank of New Zealand (RBNZ) to meet the inflation target that is specified in the Policy Targets Agreement which was signed in September 2002. The Policy requires the RBNZ ...