Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

The value of forecasting in an uncertain world

NEWS RELEASE

Date 15 May 2017

The value of forecasting in an uncertain world

Forecasting is a valuable part of the monetary policy process, helping the Bank plan for the future, communicate its current understanding and intentions, and react to unexpected events, Reserve Bank Assistant Governor and Head of Economics Dr John McDermott said today.

During a speech to the New Zealand Manufacturers and Exporters Association (NZMEA) in Christchurch, Dr McDermott outlined the reasons why the Bank regularly produces and publishes forecasts and Official Cash Rate (OCR) projections.

“Forecasting is not supposed to be prophecy; rather, it is about being precise about our thinking. It requires the Bank to be rigorous, unbiased, and open to new ideas in formulating and implementing monetary policy. Being numerically precise about our view of the future allows us to test ideas, which in turn accelerates our ability to learn and understand what is going on,” said Dr McDermott.

Dr McDermott said the economy is populated with thousands of households and businesses responding to their own particular circumstances and opportunities, and therefore the range of possible outcomes is vast. Because of the complexity of the economy and the developments continually affecting it, the Bank’s forecasts are inevitably subject to change.

“The Bank’s forecasts are highly conditional on the information currently available and are revised when important additional information comes to light. In recent Monetary Policy Statements the Bank has published scenarios to illustrate how the forecasts would change should the economy develop differently,” said Dr McDermott.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Forecasts also help people form expectations of the future and therefore guide current actions. By building people’s understanding of how the Bank is likely to react to news, and by explaining its forecasts and policy stance, the predictability of monetary policy decisions is enhanced and policy uncertainty is reduced.

More information: The value of forecasting in an uncertain world


© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.