Deputy Governor of the Reserve Bank of New Zealand
- Says it is important to keep expectations of inflation anchored
- demand needs to be moderated
'Anchored' is a hot talking point right across the DM central bank globe right now. What does it mean?
I wrote about anchoring inflation expectations here if you need a refresher:
- The argument is that inflation expectations can become self-fulfilling. For example during times of increasing inflation - people see inflation rising so they tend to buy more quickly, thus prompting prices to rise faster. People expect faster inflation (i.e. its 'unanchored' ... rising quickly)
There is more at that link.
