RBNZ’s Orr: It will be a brief recession
|Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is speaking at the November post-monetary policy meeting press conference this Wednesday, endorsing the central bank’s hawkish 75 basis points (bps) Official Cash Rate (OCR) rate hike announced earlier on.
Key quotes
It will be a brief recession.
Wage and inflation expectations must fall.
Economic activity currently strong.
Spending currently strong.
Committee spent more time considering 75bp and 100bp hike, than 50bp.
RBNZ's Chief Economist Paul Conway said that “inflation expectations are higher than expected.”
Another RBNZ official said that the neutral interest rate has increased and that monetary conditions are not as contractionary.
“We're talking about a two- or three-quarters recession,” RBNZ policymaker Karen Silk said.
Additional comments
- Are mature in a tightening cycle, closer to end than the beginning.
- But new shocks are arriving all the time.
- We are very eager to get to rate point where we can be sure inflation will be worn down.
Market reaction
NZD/USD is unfazed by Orr’s comments, keeping its range at around 0.6170, adding 0.47% on the day.
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