and academic economists to observe the decision - making process and provide comments on potential areas of improvement. 7 a recent study by the bis indicated that the bank has self - commissioned more reviews than any other central bank. 8 one further avenue of review is to assess our own forecasting performance. 9 reviews of forecast performance help to update our understanding of economic relationships, evaluate risks to the current outlook and identify areas where we could improve our accuracy. the bank will always make forecast errors, reflecting the uncertainties in assessing the current state of the economy and its outlook. for example, the vast majority of forecasters were unlikely to have been able to accurately predict the sharp decline in oil and export commodity prices that occurred over 2014 and 2015 – one factor that has led to current low see : rbnz ( 2001 ). ‘ the monetary policy decision - making process ’, independent review of the operation of monetary policy supporting paper ; rbnz ( 2007 ) above. these visitors will often present a paper containing views on the decision making process and recommendations to improve the process. bis ( 2016 ), ‘ self - initiated reviews of the central bank ’ s policy performance ’, background note for the february 2016 meeting of the central bank governance group. past forecast performance reviews include : mccaw s and ranchhod s ( 2002 ), ‘ the reserve bank ’ s forecasting performance ’, reserve bank of new zealand bulletin, vol. 65, no. 4 ; turner j ( 2006 ), ‘ an assessment of recent reserve bank forecasts ’, reserve bank of new zealand bulletin, vol. 69, no. 3 ; labbe f and pepper h ( 2009 ), ‘ assessing recent external forecasts ’, reserve bank of new zealand bulletin, vol. 72, no. 4. bis central bankers ’ speeches inflation. to further illustrate the point, figure 2 shows the bank ’ s central outlook for annual gdp growth and the error bands around this estimate implied by our past forecast errors. figure 2 june statement annual gdp growth forecast and error bands note : the error bands displayed above reflect the direction and magnitude of the bank ’ s past annual gdp growth forecast errors at different forecast horizons, calculated over the period 2010q1 - 2016q1. to set the range of the error bands, the bank ’ s forecast ( in blue ) is adjusted for bias using the bank ’ s mean forecast error at each relevant horizon. the error bands are then set symmetrically relative to this bias adjusted forecast, using the standard deviation of the

) benchmark the bank ’ s forecasting performance against other forecasters and the bank ’ s own statistical models respectively. if the bank ’ s forecasts are significantly less accurate than other forecasters or our own statistical models, then we can likely gain insights from these sources to improve our own modelling and forecasting framework. generally, the bank ’ s recent forecasts have performed well relative to these benchmarks. looking at the period since the financial crisis, the bank has been one of the better forecasters of new zealand macroeconomic variables. in addition, the bank ’ s forecasts are of a similar quality to those produced by our suite of statistical models. overall, the bank, other forecasters and the bank ’ s statistical models did not foresee the persistent weakness in inflation or the persistent strength in the new zealand dollar. this is a reflection of the inherent uncertainty that analysts and policy makers have to deal with when forecasting the new zealand economy. despite this, the persistent period of weaker - than - expected inflation remains a focus for the bank. low inflation has been a common experience in most advanced and many emerging economies. the bank has shifted its resources in recent years towards more fully understanding this low inflation environment, and this is a strategic priority in the bank ’ s 2016 statement of intent. the bank has completed a range of research topics that have shed some light on the drivers of low inflation. this includes an assessment of international influences ( including the exchange rate ), 11 a review of our frameworks for estimating key unobservable variables, 12 mcdermott ( 2016 ), ‘ forward guidance in new zealand ’, remarks by john mcdermott, assistant governor of the reserve bank of new zealand, 4 february 2016. richardson ( 2015 ), ‘ can global economic conditions explain low inflation in new zealand ’, reserve bank of new zealand analytical note an2015 / 03. bis central bankers ’ speeches assessing the inflationary consequences of different migration drivers and strong labour supply growth, 13 and highlighting the potential impact of adaptive inflation expectations on current inflation. 14 the bank will continue to update the public on the drivers of low inflation in speeches, research articles and the statement. conclusion each ocr decision and statement publication involves a lot of work from a number of staff around the bank. this staff involvement reflects the inherent uncertainty the bank is faced with when making a monetary policy decision. we have set up processes to help deal with this uncertainty and improve the quality of our monetary policy decisions. for much