The Reserve Bank of New Zealand has published its Statement of Intent (SOI) for 2012-15, saying price stability remained its primary goal, "however, we are aware that familiar economic structural landmarks may have moved."
Outgoing Governor Alan Bollard said: “New Zealand’s economic prospects will be heavily affected by developments in global funding markets; the demand for our exports; and the pace of rebuild in Christchurch.”
The Reserve Bank said these shifting landmarks included New Zealand's growth potential, the level of ‘neutral’ real interest rates, the sustainable exchange rate level, long-run unemployment levels, and private sector debt ratios.
“One of the Bank’s business priorities is to explore this changing territory and ensure that monetary and macro-prudential policies are calibrated accordingly," Bollard said.
The Reserve Bank said it was also looking to further enhance the resilience of banks by implementing new Basel III capital requirements and building policy options to resolve any bank failures, however unlikely these were.
"As a central bank, the Bank also manages a wide range of risks in its own operations, and will put in place a new risk management and assurance operating model," it said.
The bank said the SOI showed its budget for 2012–13 had a net operating expenditure of NZ$50 million, which allowed for the continuation of a banknote upgrade scheduled from 2014.
3 Comments
Promising development on a couple of counts.
The Reserve Bank are finally looking at broader objectives and a wider range of tools. Eight years too late (in terms of the asset bubbles, although they were far from the only Central Bank that ignored those), probably fifteen in fact, and absolutely 4 years late in terms of the GFC and a response to other Central Bank activity, but still, better late than never. The fact they are looking at change wil make it easier for the new man to install it.
It's also a face saving excuse (if something of a crock) to say that circumstances have suddenly changed. So change can happen without implicit criticism that the predecessor was useless. We can all pretend that circumstances have suddenly changed (when actually they did four years ago); and if pretending so makes it easier all round, then fine, as long as lessons are learned, and change does in fact happen.
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