P.M. doubts forecast

Press, 14 June 1984, Page 28

P.M. doubts forecast

PA Wellington A Reserve Bank forecast that inflation for the year would be 7 per cent was made before Government policy changes, the Minister of Finance, Sir Robert Muldoon, said in Parliament yesterday. Sir Robert was replying to a question from Mr P. Neilson (Labour. Miramar) asking his basis for a reported statement earlier this month that there would not be 7 per cent inflation. The Reserve Bank fore-

cast was used for planning purposes, and had a significent judgmental input, Sir Robert said

“The assumptions can quickly become outdated.

“They are not usuallyadopted as official Reserve Bank forecasts."

Although the forecasts were for a 7 per cent rate of inflation for the year ended March, 1985. for the

calendar year, 1984, the prediction was for 6 per cent, very similar to the Government's assessment of 5 per cent. Sir Robert said. The bank's forecast was based on the monetary policy stance, which the Government had since tightened.

"Had these policy movements been incorporated into the Reserve Bank’s forecasts, my prediction is they would have been veryclose to my own:" Sir Robert said.