Monetary Policy Statement
The Reserve Bank publishes its Monetary Policy Statement (MPS) quarterly. Each Monetary Policy Statement must set out:
- The approach the Monetary Policy Committee (MPC) is taking to achieve its operational objectives defined in the Remit;
- The MPC’s reasoning for adopting that approach, and;
- The transparency and accountability requirements of the MPC Charter:
- explain how the MPC has sought to meet the requirements of section 2b of the Remit;
- if inflation outcomes (and/or expected outcomes) are outside of the target range, explain the reason for this;
- explain how monetary policy is currently supporting maximum sustainable employment.
How the Monetary Policy Statement is prepared:
During the construction of the MPS, Reserve Bank staff present initial forecasts that the Monetary Policy Committee (MPC) subsequently discuss. The MPC has direct access to experts when forming their views. The final forecasts are amended by staff following MPC suggestions. The final monetary policy decision is based on the forecasts that have incorporated the MPC’s judgement. The MPC ultimately has ownership over the published forecasts.
More information on the construction of the MPS and the role of staff can be found in the Bulletin article: Effective monetary policy committee deliberation in New Zealand.