Reserve Bank of New Zealand plans for uncertain future

by Richard Kilner

Story link: Reserve Bank of New Zealand plans for uncertain future

The Reserve Bank of New Zealand has today released its Statement of Intent (SOI) for the period 2008-2011.

Governor Alan Bollard has said that the document was formulated during an era of uncertainty for the economic future.

As with much of the rest of the world, New Zealand’s economic activity has been in a recent downturn, with the contrasting problem of food and fuel prices driving inflation upwards at the same time.

Preceding the present global food prices surge was the beginnings of the credit crunch, which sent shockwaves through the world’s financial systems and caused a tightening of credit across the globe.

Bollard has expressed his opinion that volatility within the equity and debt markets, as well as exchange rates, is likely for the future.

He went on to explain that for the Reserve Bank, this meant that a more prudent approach to liquidity in the banking sector was vital.

The SOI is designed to promote stability to help steer the economy through uncertain times, Bollard said.