How the Reserve Bank makes OCR decisions
In a speech to the Manawatu Chamber of Commerce, he said the bank would regularly review and refine its decision-making process to help it better handle economic uncertainty and improve the quality of its policy decisions.
“Each OCR decision and Monetary Policy Statement publication is complex involving many staff from across the Bank. The significant amount of background work reflects the uncertainty we face when setting monetary policy to achieve the objectives of the Policy Targets Agreement,” he said.
“As one example of this uncertainty, major economic data are often released with a significant lag, and remain subject to revision for some time. This makes interpreting even the current economic environment difficult.”
McDermott said the bank has adopted a process to help deal with this uncertainty and improve the quality of its monetary policy decisions. Two important elements were committee decision-making and the regular review of the bank’s forecasting process.
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