New Zealand Reserve Bank President Conway: Inflation May Be Firmer In The Short Term

Early Wednesday, Paul Conway, chief economist at the Reserve Bank, spoke on inflation, noting that both sides of the Reserve Bank’s policy stance will have inflationary concerns.

Key takeaways

Inflation is likely to be firmer in the short term.

However, inflation may fall faster than expected in the medium term as spare capacity emerges in the economy, which will help inflation fall.

Challenges remain to get inflation back to the Reserve Bank’s target level.

A period of restrictive policy is necessary to provide confidence that inflation will return to target within a reasonable timeframe.

The slowdown in food price inflation is satisfactory.

Inflation needs to remain within the target range for a sustained period.

It is impossible to accurately predict when the official cash rate will fall.

The period of low inflation has returned, but economic pain is being experienced in the short term.

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