information and assess its implications for the economic outlook before coming to a judgment. in addition, the july announcement set a condition of requiring “ some further improvement in the labor market. ” from may through july, non - farm payroll employment gains have averaged 235, 000 per month. we now await the results of the august employment survey, which are due to be published on september 4. of course, the fomc ’ s monetary policy decision is not a mechanical one, based purely on the set of numbers reported in the payroll survey and in our judgment on the degree of confidence members of the committee have about future inflation. we are interested also in aspects of the labor market beyond the simple u - 3 measure of unemployment, including for example the rates of unemployment of older workers and of those working part - time for economic reasons ; we are interested also in the participation rate. and in the case of the inflation rate we look beyond the rate of increase of pce prices and define the concept of the core rate of inflation. while thinking of different aspects of unemployment, we are concerned mainly with trying to find the right measure of the difficulties caused to current and potential participants in the labor force by their unemployment. in the case of the core rate of inflation, we are mainly looking for a good indicator of future inflation, and for better indicators than we have at present. in making our monetary policy decisions, we are interested more in where the u. s. economy is heading than in knowing whence it has come. that is why we need to consider the overall state of the u. s. economy as well as the influence of foreign economies on the u. s. economy as we reach our judgment on whether and how to change monetary policy. that is why we follow economic developments in the rest of the world as well as the united states in reaching our interest rate decisions. at this moment, we are following developments in the chinese economy and their actual and potential effects on other economies even more closely than usual. the fed has, appropriately, responded to the weak economy and low inflation in recent years by taking a highly accommodative policy stance. by committing to foster the movement of inflation toward our 2 percent objective, we are enhancing the credibility of monetary policy and supporting the continued stability of inflation expectations. to do what monetary policy can do towards meeting our goals of maximum employment and price stability, and to ensure that these goals will continue to be met as we move ahead, we will most likely need

alan bollard : a financial system that works for new zealand excerpt from an address by dr alan bollard, governor of the reserve bank of new zealand, to the financial services institute of australasia, wellington, 23 may 2006. * * * " in our latest financial stability report ( fsr ), issued on 19 may, we assess that, over recent months, the new zealand and global financial systems have continued to perform soundly. however, signs of increased volatility have emerged in some markets ( eg, commodities and foreign exchange ) and some major challenges to financial stability persist. " the reserve bank's interest in financial stability and banking regulation is to ensure there is adequate identification, pricing, and allocation of risks to the new zealand financial system. " many of the current challenges to new zealand financial system stability were identified in our november report, and some have increased. for example, new zealand banks have continued to raise their exposure to the housing market. a very large proportion of foreign capital being utilised in new zealand is now intermediated through the banking sector via secured residential mortgage lending. a slower housing market will thus pose challenges to bank risk management and we will continue to monitor this closely, especially when implementing the new bank basel ii capital requirements regime. " in addition, some ( but not all ) finance companies raising funds from the public have accumulated large exposures to property and consumer finance. these institutions could be hardest hit by slowing spending ; especially those that have recently experienced rapid growth and have limited experience in managing downturns. " new zealand households have also been increasingly ready to purchase property for investment purposes. household indebtedness has increased significantly, so that over time households have raised their financial vulnerability to interest rate changes, unemployment, and swings in rental incomes and property capital values. on balance, the data suggest that the new zealand household sector has continued to increase its financial concentration and overall debt exposure. " a slower growing economy will bring challenges to some households, in particular lower and middle income households that have large debt - servicing needs. " meanwhile, new zealand's financial markets have remained sound. the decline in the new zealand dollar over the march quarter, from its previous exceptionally high level, represents some reduction in risks. the depreciation was managed in the foreign exchange market with good liquidity and efficient pricing, and was principally a cyclical adjustment to better reflect the underlying fundamentals of the economy. " we have also been working with banks to