RBNZ's chief economist says Bank is incredibly determined to get inflation back to target

Reserve Bank of New Zealand Chief Economist Paul Conway

• Inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term 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 Stagflation Stagflation is an economic environment characterised by slowing economic growth and rising inflation. In fact, the term “stagflation” is derived from the words “stagnation” and “inflation”. Stagflation as Real-Life ExampleThe 1970s is a famous stagflationary period and although there isn’t a single correct answer, economists identified two possible explanations for why it occurred. The first reason can be a supply shock like rapid increase in oil prices. This situation also increases production Stagflation is an economic environment characterised by slowing economic growth and rising inflation. In fact, the term “stagflation” is derived from the words “stagnation” and “inflation”. Stagflation as Real-Life ExampleThe 1970s is a famous stagflationary period and although there isn’t a single correct answer, economists identified two possible explanations for why it occurred. The first reason can be a supply shock like rapid increase in oil prices. This situation also increases production Read this Term 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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• Read Paul Conway's speech

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OCR is the Reserve Bank of New Zealand's Official Cash Rate

Next meeting is April 5: