Reserve Bank of New Zealand Set to tighten its Monetary Policy by Increasing the Interest Rates.
Gross Domestic Product growth rate
o Unemployment Rate
o Inflation Rate
o Consumer/business confidence measures (e.g. Lending indicators, retail activity)
Step 3: There is speculation that the Reserve Bank of New Zealand will be tightening the monetary
policy by increasing interest rate. Analyse the transmission effects from this monetary policy action on
the interest rate. Analytical frameworks which examine these effects are desirable and are to be
included within an appendix. Please ensure these are clearly labelled with headings and referred to
within the body of the Media Article.
Based on your analysis from step 3 and the current economic climate revealed within step 2, evaluate
whether the Reserve Bank of New Zealand increase, decrease or leave the same Interest Rate, given its
three important concerns of controlling inflation, maximising employment and supporting economic
There should be three main sections which
o Anticipated effects of an increase of the Interest Rate based on the economic indicators
observed within step 2.
o A statement based on your evaluation whether the Reserve Bank of New Zealand should
increase, decrease or leave the same Interest Rate. Clearly justify why, drawing
connections from your summary table of economic indicators. Further, link your
commentary to Reserve Bank of New Zealand’ concerns of controlling inflation,
maximizing employment and supporting economic wellbeing.
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