RBNZ chief economist says rate outlook could change with economic indicators
Reuters
Published May 29, 2022 09:55PM ET
By Lucy Craymer
WELLINGTON (Reuters) - The Reserve Bank of New Zealand's chief economist said its outlook for strongly rising interest rates this year could change, depending on economic indicators.
"This was our best foot forward; it was a current view," said the chief economist, Paul Conway, referring to an outlook stated last week by the central bank, a frontrunner in a global shift towards removing extraordinary stimulus put in place during the pandemic.
"If we get six weeks or 12 weeks down the track and the place is cooling a bit more quickly than anticipated ... we get to play the game again," he said in an interview with Reuters.
He added, however, that members of the monetary policy committee were really aware of the risks around inflation expectations getting away from them.
The central bank last week projected that the official cash rate would double to 4% over the coming year and stay at that level until 2024. This was more aggressive than many economists and market participants had expected.
Conway said it was fairly well accepted that the central bank needed to slow down aggregate demand in the economy, making it better match supply capacity.
Inflation pressures currently were roughly split between domestic and international drivers, he said. He expected to see signs of inflation pressures starting to subside in the second half of this year.
Inflation in New Zealand, 6.9% in the year to the first quarter, is at a three-decade high. However, wage inflation remains low.
"I'd like to see wages growing robustly but that needs to be underpinned.... It needs to be related the fact that workers are creating more value from their time at work," he said.
He was reluctant to say what wage demands people should make, however.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.