The Reserve Bank today, Monday 11 July 2016,  published a Bulletin article that explains the monetary policy decision-making process.

Seven times a year, the Reserve Bank makes a decision on the appropriate Official Cash Rate (OCR) setting.

The Reserve Bank conducts monetary policy to achieve the goals of the Policy Targets Agreement, but is faced with significant uncertainty when making OCR decisions.

A robust system is needed to address the inherent uncertainty that the Reserve Bank faces when making these decisions. The Bulletin article describes the detail of this process. The article discusses: the research behind a monetary policy decision; how the Governing Committee reaches a monetary policy decision; how the Bank communicates the decision to its key stakeholders; and how the decision-making framework is reviewed in the face of new developments.

The Bulletin article notes that a key element of the monetary policy decision making process is the need for constant review and innovation, and the Reserve Bank’s approach to decision making will continue to evolve over time.

Read the article: Behind the scenes of an OCR decision in New Zealand

Source: A RSBNZ press release