RBNZ's McDermott says core inflation still needs a shove
Reuters
Published Feb 07, 2018 08:22PM ET
RBNZ's McDermott says core inflation still needs a shove
WELLINGTON (Reuters) - The Reserve Bank of New Zealand's view that core inflation is a little below target and needs stimulatory policy to reach the midpoint of the target range has not changed significantly in the past few quarters, Assistant Governor John McDermott said.
"Core inflation is sitting a little bit below the midpoint... it still needs a little shove to get it towards the midpoint. That strategy hasn't changed," McDermott said in an interview with Reuters after the RBNZ's policy review was released on Thursday.
At its review, the RBNZ held interest rates steady at a record low of 1.75 percent, as expected.
McDermott said revisions to GDP data for 2015 and 2016 that showed the economy had grown more than thought while inflation remained moderate suggested the "speed limit" for the economy was higher than thought.
"We've moved the speed limit of what this economy can achieve without generating inflation, and it's moved upwards.
"We thought maybe it had fallen to around 2.5 (percent), now we're more comfortable it sits near three now," he said.
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Written By: Reuters
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