The challenge posed to the Reserve Bank by Auckland’s bullish housing market and low whole milk powder prices has been tackled by a team of five economics students from St Cuthbert’s College, who placed in the top 10 in the Reserve Bank’s Monetary Policy Challenge for 2016.
Using the same information as the Reserve Bank, students assessed the economic conditions facing New Zealand and the outlook for inflation, using this data to set an official cash rate.
Year 13 student Emma Westbrooke says, “The real challenge was to balance the diminishing dairy sector while also considering the buoyancy of the Auckland housing market, which is starting to be felt more widely in regions like Northland, Waikato and the Bay of Plenty.”
The team from St Cuthbert’s recommended that the official cash rate remain at 2.25% and the girls’ instincts proved to be spot on, with the latest OCR announcement in June confirming that the rate would indeed remain unchanged.
Miss Westbrooke says, “We were all watching the announcement with baited breath and having our recommendation confirmed was just amazing. When we found out that we had been given a commendation by the judges it was even better.”
Commendations are given to teams in the top 10 nationwide each year. Teams submit a PowerPoint and then present to judges from the Reserve Bank online before answering tricky questions from the judging panel.
St Cuthbert’s economics teacher, Jamie Lloyd, was impressed at the precision the girls showed when setting their official cash rate. “The girls took into account the Auckland housing market boom and the economic uncertainty surrounding this, balancing it against other significant factors such as tourism, falling dairy and oil prices and our trade weighted index.”
Mr Lloyd continues, “The competition is extremely enriching for our students and several are now seriously considering future careers in economic management, which as a teacher is very rewarding.”