Real exchange rates and monetary policy
Reserve Bank of Australia, the Bank of Canada and the Bank of England pay close attention to real exchange-rate movements, while the Reserve Bank of New Zealand does not, new research from the Bank of Canada finds.
The authors note that New Zealand does not incorporate exchange-rate movements into its policy rule because in New Zealand current inflation contains more information on past inflation. Accordingly, the Reserve Bank of New Zealand is less concerned about future inflationary pressures
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