The foreign exchange intervention framework provides an additional tool for the purpose of trying to moderate the extremes of the exchange rate cycle. Intervention operates at the margin, affecting the balance of demand and supply for the New Zealand dollar. It can have an immediate downward impact on the exchange rate as it did on 11 June.
Moreover, the situation is more complex if there are impairments in monetary policy transmission that extend the lag between our decisions and their impact on prices, as we see in the euro area today.