90 - day interest rate projection, based on a range of assumptions, provides a guide of what monetary policy settings may be needed to return or keep inflation at target. we feel that this is a more informative approach than assuming a constant or market path for interest rates – which may present an interest rate path that is inconsistent with the bank ’ s price stability mandate. forward guidance – avoiding potential pitfalls this transparent approach comes with potential costs. first, research highlights that increased transparency, in some cases, can be detrimental to the economy. this is particularly the case if the public takes the bank ’ s information as definitive, despite it being noisy or imperfect. 8 we aim to minimise such instances by offering a full discussion of the assumptions and risks that underpin our projections, to clearly highlight the limitations in our knowledge. second, some research claims that when a central bank provides an endogenous interest rate projection, fears of credibility loss may lead it to stick to a previously published policy path, even when faced with new economic developments. 9 i can say, from my experience, that this has never been a problem at the bank. for further discussion, see woodford ( 1999 ), “ optimal monetary policy inertia ”, the manchester school supplement, vol. 67, issue s1, pp 1 – 35. see ford, kendall and richardson ( 2015 ), “ evaluating monetary policy ”, reserve bank of new zealand bulletin, november 2015. see kamber, mcdonald, sander and theodoridis ( 2015 ), “ a structural model for policy analysis and forecasting : nzsim ”, reserve bank of new zealand discussion paper, dp2015 / 05. these points are expanded on in : morris and shin ( 2002 ), “ social value of public information ”, the american economic review, vol. 92, no. 5, pp1521 – 1534 ; dale, orphanides and osterholm ( 2011 ), “ imperfect central bank communication : information versus distraction ”, international journal of central banking, vol. 7, no. 2, pp 3 – 39, june 2011. this issue is discussed in : mishkin ( 2004 ), “ can central bank transparency go too far? ”, nber working paper 10829 ; goodhart ( 2009 ), “ the interest rate conditioning assumption ”, international journal of central banking, vol. 5, no. 2, pp 85 – 108, june 2009. bis central bankers ’ speeches third, some

. despite these setbacks, southeast asian countries have not turned inwards, or tried to shut out the world. they continue to embrace globalisation as the best option for securing their future, and remain committed to plugging themselves into the global grid. individually, they continue to promote fdi, encourage exports, and pursue linkages with the outside world. they know that to try to keep out new investments, technologies and competition and go it alone will condemn them to poverty and stagnation. as a group, asean is strengthening economic cooperation among its members. intra - asean trade in manufactured goods is already practically tariff - free. last october, asean leaders went a step further, and committed to creating an asean economic community by 2020. this will be a single market for goods, services, capital and professionals. externally, asean is negotiating an fta with china, and is targeting to conclude the goods chapter by middle of this year. in parallel, asean is working on a comprehensive economic partnership arrangement with japan. the us, too, has announced the enterprise asean initiative, under which it will pursue agreements with individual asean countries, taking into account their respective progress in economic liberalization. southeast asia ’ s adherence to economic liberalisation and freer trade has helped the region to stay on investors? radar screen. most of its economies have recovered from the crisis. confidence has returned and the economies are growing again. stock markets have rallied as capital flowed back into the region. the countries have made progress remedying the structural weaknesses that contributed to the crisis. their finances are now much sounder - with balance of payments in surplus, and foreign reserves accumulating. thailand is doing particularly well as the fastest growing economy in southeast asia. malaysia, has maintained satisfactory growth rates, as has indonesia despite the political and security issues. vietnam escaped the asian financial crisis and is now opening up and taking off. singapore ’ s fortune has been more mixed. it weathered the initial storm well, but then got hit hard first by the global electronics downturn and then by sars. after all these tribulations the singapore economy is now at last picking up and on a growth path again. over the longer term, southeast asia remains a region of promise, with strong fundamentals. it is outward oriented, with a large and young population, strong emphasis on education, a positive work ethic, good infrastructure, and abundant natural resources. these enduring traits are embedded into our geography and culture, and will serve us well for