far more complicated than in this simple illustration. three of the shocks shown in figure 2 delivered ongoing pressure to the economy. even the relatively short - lived large inflow of migrants in 2002 / 03 had ongoing impacts. the housing stock cannot be increased as quickly as the changes in migrant flows. consequently, house prices rose and, even after the boost to population subsided, continued to rise beyond all forecasters ’ expectations. higher house prices in turn stimulated a large construction boom which put further pressure on resources. private sector credit started to expand well in excess of the nominal growth in the economy ( figure 5 ). in line with conventional wisdom, we put relatively less weight on credit data than on interest rates. 6 had we had a higher weighting on credit growth data, our view of the persistence of pressure on resources would likely have been stronger much earlier in the boom. the academic consensus on monetary policy used to be that there was no independent information for monetary formulation in money and credit numbers over and above that available in interest rates. see for example, gali, j ( 2008 ) monetary policy, inflation, and the business cycle : an introduction to the new keynesian framework, princeton university press, princeton. while this view was never completely accepted at the reserve bank of new zealand ( bollard, a ( 2005 ) “ housing debt, inflation and the exchange rate ” address to the employers and manufacturers association ( northern ) agm ) ) money and credit aggregates were never very prominent in the formulation of monetary policy. one of the processes we changed following the global financial crisis was to formally present information on monetary and credit aggregates to the monetary policy committee to assist with the production of the bank ’ s forecasting in its monetary policy statement. bis central bankers ’ speeches figure 5 excess of domestic credit growth over nominal gdp growth source : statistics new zealand, rbnz calculations monetary policy in new zealand is also complicated by exchange rate issues. in a small open economy the inflation target is a complement to a floating exchange rate regime. during the boom period expectations of tight monetary policy to offset the excess demand pressure probably contributed to the persistently high exchange rate throughout the period, causing considerable discomfort and worries about the sustainability of parts of new zealand ’ s tradable sector. after the global finance crisis there are new challenges for monetary policy to deal with. the current recovery in the business cycle, both in new zealand and in other advanced economies, is proving weaker than historical precedents. our forecasting frameworks

that does not mean that there is a particular formula or set of institutional arrangements that can readily be picked up and transplanted. no doubt, the bank of thailand is bringing its own perspectives to these issues, and adapting the experience and practice of others to find structures that best suit local conditions. i wish them well in that endeavour. references bernanke, ben s ; laubach, thomas ; mishkin, frederick s ; posen, adam s 1999. “ inflation targeting. lessons from the international experience ”. princeton university press. brash, donald. 1999. “ inflation targeting : an alternative way of achieving price stability ”. a speech delivered on the occasion of the 50th anniversary of central banking in the philippines. reserve bank of new zealand bulletin, vol 62 no 1. king, mervyn. 1999. “ the mpc two years on ”, lecture delivered to queen ’ s university, belfast. reddell, michael. 1999. “ origins and early development of the inflation target ”. reserve bank of new zealand bulletin, vol 62 no 3. sherwin, murray. 1999. “ inflation targeting : 10 years on ”. paper delivered to the new zealand association of economists conference in rotorua. reserve bank of new zealand bulletin, vol 62 no 3. sherwin, murray, 1999. “ strategic choices in inflation targeting : the new zealand experience ”. paper delivered to an imf and central bank of brazil seminar on inflation targeting. stevens, glenn. 1999. “ six years of inflation targeting ”. address to economic society of australia. svensson, lars e o 1997. “ inflation forecast targeting : implementing and monitoring inflation targets ”. european economic review, vol 41.