time illustrate how flexible inflation targeting operates in practice. the forecasts evolved to ensure that medium - term price stability would be maintained. therefore, despite inflation being weaker than expected and the revision to the 90 - day interest rate outlook, the credibility of the monetary policy framework has been maintained. medium - term inflation expectations have fallen over the past six months, but are currently near the 2 percent target midpoint ( figure 4 ). external forecasters also expect inflation to return to target over the medium term. bis central bankers ’ speeches crucially, the bank is – and perceived to be – committed to its inflation target, which helps anchor inflation expectations. when formulating monetary policy, the pta directs the bank to have a forward - looking focus, irrespective of past inflation outcomes. the projection, at any time, seeks to ensure that price stability can be achieved while avoiding unnecessary instability in output, interest rates and the exchange rate. the bank will continue to adjust monetary policy as conditions evolve to ensure that price stability is achieved over the medium term. conclusion when it comes to communication, central banks use a diverse range of practices, and best practices differ from country to country. for new zealand, we find it beneficial to publish a projection for the 90 - day interest rate. it supports transparency, and its evolution over time contributes to market participants ’ understanding of how the bank responds to unexpected economic events. the projections are conditional in nature, reflecting the many challenges faced in forecasting the new zealand economy. it is important financial market participants understand that these forecasts are not a commitment to a certain path of policy. indeed, financial market participants generally have a very good understanding of the conditional nature of our forecasts. the experience since the beginning of 2014 highlights the conditional nature of our interest rate forecasts. unforeseen economic events led to weaker - than - expected inflationary pressure in the economy. as a result, we significantly revised down the outlook for short - term interest rates. the bank will continue to adjust monetary policy as conditions evolve to ensure that price stability is achieved over the medium term. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

when? ’. for example, often there is a long period of time after a customer - relationship has been established. in very difficult circumstances, a customer may find that they do not have the coverage they http : / / www. legislation. govt. nz / act / public / 2010 / 0111 / latest / dlm2478122. html ref # 8609867 v1. 2 page 3 of 7 believed would be available to them. and, on the other side of the ledger, insurers rely on accurate information from customers about their own circumstances. finally, the reserve bank is not tasked with guaranteeing insurers against failure. as we have seen with the collapse of cbl and the bailout of ami, the failure of an insurer is a significant event. even if a single - firm - failure does not threaten the financial system as a whole, such events challenge public confidence. insurance challenges continuously evolve further complicating the task of promoting a sound and trusted insurance sector is that expectations and circumstances continuously change. customer expectations of ‘ good outcomes ’ from insurance are evolving, and there is a heightened awareness across the financial sector as a whole of the importance of good business conduct. risks also evolve. for example, climate change is leading to more frequent insurance events, and this is driving new ways of thinking about risk. just as advances in technology are providing more data and insight into insurance risk pricing. the reserve bank believes that the insurance sector must ensure that high quality risk management capability is in place, to support appropriate insurance outcomes. we support insurers using the best information to understand their customers and the risks faced by the insurer. we also respect that insurers are free to make their own commercial decisions. getting your risk management and pricing right is an important foundation to a sound insurance sector. however, we are conscious of the wider implications on the economy and asset prices as insurance providers make their individual business decisions. orderly and well - articulated changes in insurance and pricing strategies are needed, so that all participants in the financial sector – and wider economy - can adapt their behaviour without creating unintended outcomes. the reserve bank will be monitoring the development of insurance risk - based pricing, to ensure we understand the potential wider economic consequences and any impact on new zealand ’ s financial stability. we will comment on what we are observing to date in our upcoming financial stability report on 27th november. the reserve bank ’ s policy and supervision challenges also