Reserve Bank governor Graeme Wheeler's job looks safe even if, as some forecasters suggest, inflation drops below the bank's target range of an annual 1 to 3 per cent because of the slump in oil prices.
The current policy targets agreement (PTA) the bank has with the Government defines price stability as annual increases in the consumers price index (CPI) of between 1 and 3 per cent, on average, over the medium term.
Wheeler is answerable to the Finance Minister should there be a breach either side of the range. Under normal circumstances, a drop below 1 per cent would be be seen as serious, as it would be too close to deflation for comfort.
"Meeting that target has always been taken very seriously," said ASB Bank chief economist Nick Tuffley. "It's a key performance objective for the governor to meet."
But the PTA has a clause in it that covers exceptional movements in the prices of commodities traded in world markets. The slump in oil prices would appear to fit the bill.
In the year to September, annual inflation was sitting on the cusp at 1 per cent.
Some economists expect Statistics New Zealand's January 21 data release to show the CPI ducked below 1 per cent in calendar 2014, thanks to the sharp drop in oil prices to under US$50 a barrel levels.
"The thing about the 1 to 3 per cent is that it's an average over the medium term, so below 1 per cent for a short period is not an issue in itself, just as we have had times where it's gone above 3 per cent for the same reason but in reverse - a very sharp lift in oil prices that pushed up fuel prices," Tuffley said.
While the definition of "medium term" is not clear, Tuffley said an average above or below the 1 to 3 per cent range over a prolonged period would give cause for concern.
"The challenge of lower or higher oil prices is that it has an immediate impact on inflation, occurring over a very short space of time," he said.
"No central bank could reasonably respond to that and try and shift inflation to parts of the economy to try and offset oil prices."
Over time the PTA has become move flexible. During former Governor Alan Bollard's tenure, wriggle room was built into the agreement when the words "on average over the medium term" were inserted.
ASB expects annual inflation of 0.9 per cent in the December year and 0.8 per cent in March year.
Deflation is seen as a greater risk than inflation because it encourages consumers to defer spending in the expectation of cheaper prices in future, which in turn slows down economic activity.
Bank of New Zealand senior economist Doug Steel said it was clear that prices were going to have a big impact on the coming quarters' inflation readings.
"While it's deflationary in the sense that the CPI is going down, we think, for a couple of quarters, it's very different to what we're seeing in the likes of Europe, where wages and asset markets are subdued," he said.
"It's quite different in New Zealand where we have some wage growth and asset prices are pretty strong."
BNZ economists are forecasting a 0.2 per cent fall in the the consumers price index in the December quarter and a 0.3 per cent drop in the first three months of 2015, which would be the first two consecutive quarters of deflation since the Asian financial crisis of 1998-99.