If you are unfamiliar with the Shadows (source):
In brief:
- The Shadow Board is sharply divided over how much the Reserve Bank should increase the Official Cash Rate (OCR) at the April meeting, with views split over whether the OCR should increase by 25 or 50 basis points.
- The surge in inflation pressures has led to growing calls for the Reserve Bank to undertake monetary policy tightening at a more aggressive pace to rein in these inflation pressures.
- While supply-side constraints are driving much of the increase in inflation in the New Zealand economy, the recent rise in longer-term inflation expectations raises the risk of a wage-price spiral developing.
- However, some Shadow Board members called for caution in the pace of interest rate increases over the coming year. The recent weakening in business and consumer confidence due to uncertainty stemming from the spread of the more transmissible Omicron variant of COVID-19 and the war in Ukraine were provided as reasons for a more measured pace of monetary tightening.
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The question for the RBNZ on inflation driven by supply-side constraints vs. the risk of a wage-price spiral developing is a question for some other central banks also. There's also the impact of surging deamnd addressed by Mester of the Fed over the weekend:
Weekend comments from Fed's Mester - rate hikes will cool demand
The RBNZ meet this week, on the 13th. Announcement is at 0200 GMT.
Prepare for a 50bp hike is my best guess.
