RBNZ Governor Adrian Orr, in his address to a parliament select committee today, emphasized there is “still a long way to go” to curb inflation. He added, “it’s core inflation that’s going to be our challenge ahead”.
Orr also noted the complexity of this challenge, pointing out that much of the core inflation factors are entrenched within central and local government influences, including rates and taxes. He cautioned that tackling these elements in the “last five yards on the inflation battle is going to be tough.”
Adding to the economic challenges, Orr highlighted the current record-high levels of net inward migration in New Zealand. This surge in migration has surpassed RBNZ’s expectations and presents additional complexities for monetary policy, housing demand, asset prices, and the general inflation outlook.
Regarding the country’s economic growth, Orr mentioned that GDP was “surprisingly subdued,” with a contraction of -0.3% in Q3. He indicated that RBNZ is internalizing this complex situation and will provide more detailed insights in their monetary policy statement due in February.