RBNZ Assistant Governor Christian Hawkesby said in a Bloomberg TV interview, “in New Zealand we’ve had a very resilient economy, we’ve got core inflation running near the top of our 1-3% target range, we’ve got an employment market that’s through what we think it maximum sustainable employment.”
He said, “so we’re getting pretty clear signals that we need to continue this process of removing stimulus and getting interest rates back up towards neutral.”
“Inflation expectations are going to be absolutely key for us. There are things that could make us go faster, and I think inflation expectations is one, he said. “Five- to 10-year inflation expectations are very well anchored. Short-term inflation expectations have lifted with headline, but lifted in a way that we would anticipate, so I think that’s a really key thing to watch.”
“On the upside, the risks are that we’ve had a very strong economy, a big change in the starting point, inflation expectations, there’s a risk that they lift,” he said. “But on the other side, interest rates have moved a long way here in New Zealand, mortgage rates are nearly 2% up from their lows in January, and ahead of us we’re going to have to navigate having Covid in our community.”
