Deputy Geoff Bascand told a meeting in Auckland that understanding of, and confidence in the Bank’s actions and messages – and the institution itself – was essential.

He said sometimes what the Bank said about what it was going to do in terms of monetary policy was almost as effective as what it did do.

“In this context, statements and analysis by the Bank are designed to inform and shape expectations about future monetary policy settings. Indeed, when used in this instrumental manner, the words of the central bank are themselves monetary policy actions."

He said:  “The communication challenge with forward guidance – which equally applies to publishing interest rate projections – is how to reduce uncertainty about the likely path of policy while at the same time conveying its conditionality and the possibility of change in policy settings…Achieving this depends crucially on the private sector believing the bank’s unwavering commitment to the inflation target.”

But it had become clear that not all interested parties always had the same understanding of what the bank meant, he said.

The bank has not been shy about likely interest rate rises next year. But Bascand said there still seemed to be significant surprise when an opinion column spelt them out recently.

“A recent foray into the ‘public audience’ via an opinion article explaining the LVR policy, that repeated our monetary policy expectations, appeared to reveal substantial public surprise about our interest rate projections,” he said. “While unintentional, it therefore possibly enhanced the projection’s impact.”

Bascand said: “We have reiterated that LVRs are targeted at the primary objective of financial stability, but that there is also a potential benefit for monetary policy if they reduce the spillover of house price inflation into stronger consumer demand and higher price inflation for goods and services. Explaining important inter-dependencies with other policies – our own or wider government ones – is vital.”

So far this year bank staff have given 17 on-the-record speeches, eight more than last year, and 90 off-the-record addresses. That is on top of the six-weekly official cash rate and quarterly Monetary Policy Statements.