The Reserve Bank is front and centre in the debate about New Zealand's housing situation but that did not tempt assistant governor John McDermott to give any signals in a speech he gave yesterday.
In a speech entitled "Making monetary policy decisions'', Dr McDermott said the persistent period of weaker-than-expected inflation remained a focus for the bank.
The bank's research programme was shedding light on the drivers of low inflation.
"Increasing our understanding of low inflation is a strategic priority for the bank.''
Dr McDermott specifically said his speech did not contain any messages about upcoming monetary policy announcements.
Financial markets have been anxiously awaiting some sign from the Reserve Bank about its thinking on future official cash rate cuts. Forecasts range from one cut next month to 2%, from the current 2.25%, to two cuts before Christmas to 1.75%. However, yesterday was not a day for that sort of information.
Westpac senior economist Satish Ranchhod said the speech was focused on the Reserve Bank's internal decision-making process and was a repeat of the material the bank released earlier in the week.
The material highlighted the central bank had increasingly made use of committees in its internal decision-making process, when setting the OCR.
"They indicated this process has been working well.''
The Reserve Bank's openness in discussing changes in its decision-making process was likely to be a pre-positioning on its part for when the policy target agreement (PTA) between the governor and the minister of finance was next renegotiated.
The current target was to keep inflation between 1% to 3%, with the mid-point of 2% the optimum goal.
It was widely expected that when the PTA was reviewed, there would be consideration of whether the Reserve Bank should formally adopt a committee for setting the OCR, Mr Ranchhod said.
In contrast, the Reserve Bank could maintain its existing single decision-maker model, albeit with the changes already introduced along the lines of a committee structure.
The text of Dr McDermott's speech could be used to justify either approach.
The Reserve Bank also used the speech to highlight it constantly reviewed its forecasting process to ensure it provided a solid base for decision making.
The Reserve Bank was typically viewed as one of the most reliable forecasters of New Zealand economic conditions, Mr Ranchhod said.
