1 October 1998
The Reserve Bank today made public its 1998 Annual Report.
This Annual Report is based on a different format from years past. Particular highlights are a chronology, a plain language summary of the Reserve Bank's activities during the period reported on, and a description of the Bank's specific plans for the coming year.
Key features during the period reported on were:
- A new Policy Targets Agreement was signed on 15 December 1997, on the reappointment of the Governor, with an unchanged 0 to 3 per cent inflation target.
- However, the target was redefined in terms of the All Groups Consumers Price Index excluding credit services (CPIX), as published by Statistics New Zealand.
- Throughout the year to June 1998 inflation was close to the middle of the 0 to 3 per cent target. In the 12 months to June 1998 CPIX inflation was 1.7 per cent.
- In July 1997 the Thai baht fell sharply, which was the first serious sign of turbulence in the financial markets of East Asia.
- As the consequences of the Asian financial crisis became more severe, in New Zealand the monetary policy easing that had begun back in December 1996 accelerated.
- The New Zealand financial system remained in good health during the 1997/98 year.
- Real-time gross settlement of inter-bank transactions was implemented in March 1998.
- Two new banks were registered.
- The decision was made that, as from mid 1999, the nation's bank notes would be made of a new material, a flexible "polymer" plastic.
- The Reserve Bank's operating costs, where covered by its Funding Agreement with the Government, were 17.6 per cent below the provision of the Agreement and 3 per cent below equivalent actual costs the year before.
Reserve Bank Governor Don Brash commented: "The period reported on in this Annual Report has been very demanding for the Reserve Bank, primarily because of events outside New Zealand. However, New Zealand's policy framework - in regard to monetary policy, the floating currency and the Reserve Bank's oversight of the financial system - has proved robust. Monetary policy has been able to react quickly and effectively in the face of rapidly changing circumstances, so lessening the adverse impact of developments abroad."
For further information contact
Corporate Affairs Manager
Phone 04 471 3671, home 04 479 5457, pager 026 105 085,