RBNZ raises the Official Cash Rate by 50bps to 3.00% as widely expected, as “core consumer price inflation remains too high and labour resources remain scarce”. It also maintains hawkish bias as “committee members agreed that monetary conditions needed to continue to tighten until they are confident there is sufficient restraint on spending to bring inflation back within its 1-3 percent per annum target range.”
The central bank noted domestic spending has “remained resilient”, supported by a “robust employment level, continued fiscal support, an elevated terms of trade, and sound household balance sheets in aggregate.” Production is being “constrained by acute labour shortages”, heightened by seasonal illnesses and COVID-19. Spending and investment continues to “outstrip supply capacity”. Wage pressures are “heightened”. A range of indicators highlight broad-based domestic pricing pressures.