26 February 2001 Media Advisory

The Independent Review of the Operation of Monetary Policy conducted for the Government by Professor Lars Svensson will be publicly released next Wednesday, February 28 at 4pm.

Finance Minister Michael Cullen, Professor Svensson and Reserve Bank Governor Don Brash will hold a press conference on the 14th floor of the Treasury, No. 1, The Terrace at 3.30pm.

The report is strictly embargoed to 4pm but copies will be available to representatives of the media under lock-up conditions from 2.45pm on the 14th floor.

At 4pm, the report will be published on the review home page [http://www.monpolreview.govt.nz]. Dr Cullen's press release will be available on the Government's website [http://www.executive.govt.nz].

Thirty submissions were received. Professor Svensson was asked to consider:

* The way the Reserve Bank interprets and applies the inflation target set out in the Policy Targets Agreement with a view to ensuring that this approach to achieving medium term price stability is consistent with avoiding undesirable instability in output, interest rates and the exchange rate.
* Whether the Reserve Bank has an adequate range of instruments and is using its current instruments effectively in altering monetary conditions in the desired direction.
* The range of sources, availability, type and timeliness of data, and the impact of these variables on forecasting and decision making.
* Whether the policy decision making process and accountability structures promote the best outcomes possible.
* The co-ordination of monetary policy with other elements of the economic policy framework, including an evaluation of the relationship between monetary policy operations and other Reserve Bank functions such as prudential oversight of financial institutions.
* Whether the Reserve Bank's communication of monetary policy decisions to the public and financial markets is as simple, clear and effective as possible.

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