real - time properties ”, rbnz analytical note, an2015 / 08. 7 lewis, michelle ( 2016 ), “ inflation expectations curve : a tool for monitoring inflation expectations ”, rbnz analytical note, an2016 / 01. in view of low inflation outturns since 2014, the bank undertook a review of its forecasting performance. reviews of forecast performance help to update our understanding of economic relationships and identify any areas were we could improve our accuracy. 8 generally, the bank ’ s recent forecasts have performed better than external benchmarks. 9 looking at the period since the gfc, the bank has generally been better than others at forecasting inflation, and its forecasts have been of a similar quality to those produced by a suite of statistical models. 10 this forecast review suggests that there were no obvious sources of new information that the bank could reasonably have been expected to incorporate when preparing its forecasts. conclusion annual cpi inflation for the september quarter is going to be low, as incorporated into the bank ’ s most recent projections. however, it is expected to rise in the december quarter and be at the bottom of the target range as the transitory effects of earlier declines in oil prices dissipate. as described in the september ocr review, monetary policy will continue to be accommodative. our current projections and assumptions indicate that further policy easing will be required to ensure that future inflation settles near the middle of the target range. actual inflation has been low, and lower than forecast, for several years – both here and abroad. the potential reasons for this are a topic of discussion around the world. in new zealand, much of this weakness can be attributed to global developments that have presented themselves via the high new zealand dollar and low inflation in our import prices. strong net immigration and increased labour market participation have also boosted the supply potential of the economy, meaning that new zealand has been able to grow at a robust pace without generating significant inflation. there also appear to have been changes in how inflation is generated in new zealand : the drivers and composition of net immigration influence the degree of i recently delivered a speech that discussed this forecast review in more detail : “ how the bank formulates and assesses its monetary policy decisions ” 9 lees, kirdan ( 2016 ). “ assessing forecast performance ”, rbnz bulletin, 79 ( 10 ). 10 reid, geordie ( 2016 ), “ evaluating the reserve bank ’ s forecasting performance ”, rbnz bulletin

, rbnz estimates. a weak world economy has been a key factor underpinning the new zealand dollar, with new zealand ’ s performance relative to other advanced economies supporting demand for new zealand dollar assets. the new zealand dollar exchange rate has been higher than the bank had assumed for much of the period ( figure 5 ). the new zealand dollar has remained elevated despite periods of increased risk aversion and steep declines in new zealand ’ s export prices. the strength of the new zealand dollar has dampened the prices of new zealand ’ s imports, and contributed significantly to the current low inflation, particularly in the tradables sector. figure 5 : nominal new zealand dollar trade weighted index and the evolution of rbnz estimates ( actual shown in bold ) index source : rbnz estimates. the prices of the goods and services that new zealand imports have also been lower than expected – even once the effects of high exchange rate have been taken into account. again, a weak global economy has been the contributing factor, with significant spare capacity across the globe dampening the world prices for new zealand ’ s imports. in addition to this impulse, there was a sharp decline in the price of oil over 2014 and 2015, reflecting a combination of increased global supply and a moderation in growth in emerging economies. this drop in oil prices has contributed further to low inflation in new zealand. it is possible that structural changes may have also contributed to negative tradables inflation in new zealand. this could include developments such as a change in exchange rate pass - through, or a permanent shift in distributor or retailer margins. however, bank research suggests that such structural developments do not appear to account for weakness in internationally - driven inflation in new zealand. that is, although movements in the drivers of low tradables inflation – the exchange rate, oil prices and global prices for our imports – have led to negative tradables inflation, it does not appear that there has been a material or permanent change in the ways that these drivers transmit through to domestic inflation. 1 domestic inflation in recent years has been dampened by some sector - specific factors. communications prices have been falling since 2011 ( figure 6 ). the lower measured prices reflect an increase in quality : an increase in the size of broadband packages offered ( at similar monthly charges ) ; increased data and call minutes for mobile services ; and the more - recent introduction of ultra - fast broadband. the net reduction in vehicle relicensing fees ( reflecting a change in the way acc calculates