September 2008 Reserve Bank Bulletin released

Release date
26 September 2008

The Reserve Bank today released the September 2008 issue of the Reserve Bank of New Zealand Bulletin.

This edition of the Reserve Bank Bulletin is built around the theme of inflation.

The first article notes that New Zealand's long-serving inflation-targeting framework has served the country well, and continues to do so. However, the article also discusses the strength of the current forces on the economy, and argues that inflation targeting can only do so much to buffer these forces and promote stability.

The second article discusses how inflation developments overseas over the past decade have influenced inflation pressures in New Zealand.

The third article reviews the research on why inflation is costly, and why price stability is therefore important.

The fourth article is an interview with the well-known macroeconomist Bob Gordon, who offers some interesting insights into how the inflation process works in modern economies, how macroeconomic research on inflation has developed, and some of the challenges currently facing monetary policy.

This edition of the Bulletin also provides an article discussing the current financial market turmoil's origins in world macroeconomic dynamics. The very large flows of funds internationally in recent years have played a key role.

The final article explains credit ratings and their role in the financial system. Credit ratings are a simple risk measure that can assist investors to make investment decisions, but also have limitations. The article highlights some of the key issues that investors should be aware of when using credit ratings.

Media contact:
Anthea Black
Ph 04 4713767, 021 2225225, anthea.black@rbnz.govt.nz