December 2006 Reserve Bank Bulletin released
The Reserve Bank today released the December 2006 issue of the Reserve Bank of New Zealand Bulletin.
The first article of this issue considers the role of core inflation statistics and outlines a range of possible calculation methods. The article sets out some characteristics that a core inflation measure might ideally possess and then goes on to assess seven core inflation measures used at the Reserve Bank in light of these criteria. Whilst there are trade-offs involved, the article identifies three measures that appear to meet these criteria better than the others. The Bank intends to report regularly on these three measures in its future Monetary Policy Statements as well as publishing them on its website.
Under the Reserve Bank's local incorporation policy, systemically important banks are now required to incorporate locally to provide a degree of assurance that the Reserve Bank would have the ability to manage a failure affecting one of these banks. The second article provides an outline of this policy and the rationale for it.
The third article briefly discusses the Reserve Bank of New Zealand Amendment Act 2006, passed in October, which makes further amendments to the existing Reserve Bank Act passed in 1989.
The fourth article describes changes to the liquidity management regime that were implemented between July and October of this year, and notes that the system appears to have been functioning more smoothly since the changes.
Finally, this issue includes the Editors' summary of the policy forum held earlier this year to examine New Zealand's macro economic policy frameworks and consider whether alternative, possibly non-conventional, policy tools could be used to provide a smoother ride for the exposed sectors of the economy over the business cycle. The full conference proceedings and papers can be downloaded from the Bank's website.
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