RBNZ Deputy Governor Christian Hawkesby said in a speech that “we still think we have more work to do” to bring down inflation.
“We’ve seen very little impact of higher interest rates so far, outside of falling house prices and a cooling of the construction pipeline,” he added.
“As inflation expectations have been rising, we also think that neutral interest rates have drifted higher, meaning that the OCR needs to be higher than otherwise before monetary policy is really restricting the demand side of the economy,” he said.
Hawkesby pointed to November projections that the OCR would peak around 5.50%. But he noted, “25 years as an economist has taught me that the only certainty is that our forecasts won’t be exactly right. There are always shocks and unexpected developments that will evolve the story.”
