Reserve Bank Issues Statement of Intent

Article excerpt

30 June 2008

The Reserve Bank has released its Statement of Intent (SOI) for 2008-2011. Reserve Bank Governor Alan Bollard said the SOI has been written in a period of considerable uncertainty in the outlook for the economy.

"Over the last six months or so, economic activity has slowed down markedly, while inflationary pressures, especially in fuel and food prices, have continued to strengthen," Dr Bollard said.

Since August 2007, the financial system has withstood a severe test of global financial markets, triggered initially by losses in the US sub-prime mortgage market. The IMF has described unfolding events as the largest financial shock since the Great Depression.

"The adjustment process might prove to be protracted Further volatility in world equity markets, exchange rates, and debt markets is likely," Dr Bollard said. "In this environment, a key strategic priority for the Bank is to strengthen its prudential liquidity policy for banks."

Dr Bollard said the Bank is also implementing the new regulatory arrangements for non-bank deposit-takers and the insurance sector. …