RBNZ: Forecasting is still a necessary evil – ANZ

Analysts at ANZ points out that there wasn’t much in the way of direct reference to the current outlook for monetary policy in RBNZ Assistant Governor McDermott’s speech yesterday evening on “The Value of Forecasting in an Uncertain World”.

Key Quotes

“Instead the message was more that forecasting is hard, and the numbers presented will be wrong (“they are highly conditional on the information currently available”), but forecasting is still a necessary evil given that it helps with the effectiveness of monetary policy and also assists in the learning process when things inevitably turn out differently to what was expected. But perhaps there was also a more subtle message for the policy outlook. McDermott noted that “uncertainty remains high”. And while he reiterated that the RBNZ is flexible and will respond if evidence showed conditions evolving differently to expectations, the extent of uncertainty may mean that it is going to take more to sway it from its cautious stance right now. In other words, ‘when in doubt, do nowt’.”