Advertisement
Advertisement

NZ central bank chief says inflation heading in ‘right direction’

By:
Reuters

By Lucy Craymer WELLINGTON (Reuters) - Reserve Bank of New Zealand Governor Adrian Orr said on Thursday the central bank was confident domestic inflation was now tracking lower.

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is pictured during an interview at the bank in Wellington

By Lucy Craymer

WELLINGTON (Reuters) – Reserve Bank of New Zealand Governor Adrian Orr said on Thursday the central bank was confident domestic inflation was now tracking lower.

“We are at the low end globally and we are tracking in the right direction,” Orr said in response to questions from parliament’s Finance and Expenditure Committee.

On Wednesday, the RBNZ increased the cash rate by 50 basis points to 3.0% as it seeks to get inflation under control. New Zealand inflation is currently at three-decade highs having hit 7.3% in the second quarter.

He added that labour shortages were a key constraint on economic activity and that was a reason the central bank was working to consciously slow demand to better match capacity.

“Our outlook ahead shows that as spending growth slows, labour is freed up,” he said. He added that the central bank is also projecting an increase in inbound migration.

The central bank expects house prices will fall around 20% by mid-2023 from their peak at the end on December 2021.

Orr said even with these falls, prices would be above pre-COVID levels.

“But there will be and there is financial stress in many households because people have taken on significant mortgages, significant commitments,” he said.

He said, however, New Zealand was in a very good place to manage through this period of higher mortgage rates.

(Reporting by Lucy Craymer; Editing by Leslie Adler and Sam Holmes)

About the Author

Reuterscontributor

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV. Learn more about Thomson Reuters products:

Did you find this article useful?

Advertisement