Figure 1 Household saving to disposable income ratio  Source: Statistics NZ  Into this mix another completely unanticipated event fell. The Canterbury earthquakes, centred on the second largest city in New Zealand – Christchurch – caused a catastrophic loss of life, property and infrastructure. BIS central bankers’ speeches  3  To rebuild Christchurch will cost at the very least $ billion.
This means that monetary policy seeks to ward off fluctuations in the overall price level, ie inflation and deflation. The objective of price stability invariably concerns the general level of prices for goods and services over the medium term.