Reserve Bank of New Zealand Chief Economist Paul Conway
- Inflation is high and widespread because strong demand outstripped supply.
- Incredibly determined to get inflation and inflation expectations back to target
- No conflict between monetary policy and financial stability
- Returning inflation to target could be made more difficult if businesses and workers try to push up their real profit margins and real wages
- Currently, with inflation well above target and employment clearly above its maximum sustainable level,
- In a stagflation environment of low growth, rising unemployment and high inflation, the optimal path for interest rates becomes less clear
- Monetary policy can’t do anything about income lost because of the pandemic, the war in ukraine, and recent natural disasters
- We have a medium term focus for our price stability objective
- We expect this monetary policy tightening to cause the New Zealand economy to enter a mild recession later this year as demand slows
- OCR is now comfortably above neutral and having the desired contractionary effect
- Welcome signs demand in the economy is slowing.
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OCR is the Reserve Bank of New Zealand's Official Cash Rate
Next meeting is April 5:
