RBNZ Assistant Governor Christian Hawkesby said today that the central bank would take “considered steps” in raising interest rate. He added, “we have more confidence around the fact that the labour market is tight and that’s going to build inflation pressures.”
Regarding the government’s plan to reopen borders from January, Hawkesby said “One risk we are conscious of in the very short term is that even when the borders reopen, that actually becomes easier for more Kiwis to leave the country than it does for foreigners to come in… So there is a potential that the labour market gets tighter before it gets looser”.
Also, “at the moment a higher currency in the short term will actually help us achieve our objectives more quickly because a strong currency will feed through a lower tradeables inflation and feed through to lower inflation, and we are managing inflation from the top side.”
Separately, outgoing Deputy Governor Geoff Bascand said inflation is “definitely got some persistence to it for the next 12 months”. He added, we’ll see the CPI moving along at 4 percent over the next year, but we think it will moderate over time, some of those things that have driven it up won’t last forever.”
Bascand also said, “we will keep reducing stimulus and do our part to stop inflation from getting momentum into it.”
