the health and conduct of the sector. the reserve bank ’ s insurance agenda for the coming year ( or years ) is thus very full. we are committed to openly communicating our development priorities to insurers and the wider public, so that individuals and firms have the opportunity and ability to be an active participant in the policy development. https : / / www. rbnz. govt. nz / news / 2019 / 01 / fma - and - rbnz - report - on - life - insurer - conduct - and - culture ref # 8609867 v1. 2 page 7 of 7 what we ask of you, is that you engage openly and early with us, and that you heed the lessons of the banking and life insurer conduct and culture reviews. we look forward to working with the industry and other interested parties as we embark upon this next phase of our insurance supervision development. thank you for your time today, and in the near - future. ref # 8609867 v1. 2

bank ’ s past forecast errors at each relevant horizon. the dark shaded areas cover + / - one standard deviation. the light shaded areas cover an additional + / - one standard deviation. to say the potential for forecast errors is large is an understatement. so why do we even forecast at all? there are two important reasons. first, monetary policy influences activity, including wage - and price - setting behaviour, with a lag. second, it is the outlook for the economy that matters for the economic behaviour of firms and households today. therefore, we need an understanding of the likely direction of the economy over the next few years, to guide our monetary policy strategy to achieve price stability. we do a number of things to deal specifically with the uncertainty of our forecasts. first of all, we use a range of additional information to supplement our projections and guide our policy decisions, rather than relying solely on model driven forecasts. this includes market intelligence from our business liaison programme and the 120 or so presentations we make around the country to business and other groups each year. second, we aim to highlight the conditional nature of our forecasts, and how we would respond if conditions developed differently. that way, financial market participants can anticipate our likely response when the economy evolves in an unexpected way. this helps to shift the yield curve towards levels consistent with medium - term price stability without the bis central bankers ’ speeches constant need for comment from the bank. the bank ’ s approach to forward guidance is something i talked about in a speech earlier in the year. 10 third, we regularly investigate what we can learn from our past judgements. table 1 presents the bank ’ s forecast errors on key macroeconomic variables since the first quarter of 2010. the bank ’ s projections have been inaccurate in two specific respects over this period. cpi inflation has been consistently weaker than forecast, while the new zealand dollar has been stronger than forecast. table 1 mean forecast error ( monetary policy statement forecasts ) note : this table presents the mean errors of the forecasts from the bank ’ s statement made over the period 2010q1 to 2016q1. cpi inflation, 90 - day rate and gdp errors are in percentage points and the twi errors are index points. a positive number implies the outturns were lower than the bank had forecast. one way to assess what we can learn from forecast errors is to benchmark our performance against other forecasts. lees ( 2016 ) and reid ( 2016