This dysfunction caused short-term interest rates to spike, and the Reserve Bank responded by conducting operations which injected a large amount of settlement cash. Further operations to help anchor short-term interest rates were necessary; however, these risked the settlement cash level exceeding the sum of all banks’ credit tiers, meaning it would not be possible for banks to avoid incurring a penalty interest rate.
9 These summarise the extent of uncertainty based on previous forecast errors. Since February of last year, we have also published an unemployment rate forecast and confidence intervals around that. In addition to confidence intervals, the forecasting process leads us to think about the risks associated with specific economic developments and to quantify those where possible.