RBNZ’s Orr: We are still predicting a recession over a 9-12 month period
Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is speaking at the February post-monetary policy meeting press conference this Wednesday, sticking with the central bank’s hawkish outlook following a 50 basis points (bps) Official Cash Rate (OCR) rate hike announcement.
Key quotes
“We are still predicting a recession over a 9-12 month period.”
“Too early to determine impact of Cyclone Gabrielle.”
“Prices for some goods are likely to spike in the weeks ahead.”
“Demand must slow significantly.”
“Increased deposit rates will promote savings.”
“More savings will relieve inflationary pressures.”
“Discussions heavily focussed on 50bp hike.”
“All options remain on the table including 25, 50 and 75 bps hikes.”
“Demand for labour has increased due to the impact of the cyclone.”
“Very little discussion of a 25bp rate hike, most focus was on 50bp.”
“There are early signs of easing spending.”
“Core inflation will gradually decline.”
“We estimate that rebuild will increase GDP by 1% over time.”
“See inflation in Q1 at 7.3%.”
“Migrant labour puts pressure on demand.”
“There is no evidence that inflation targets should be raised.”
Meanwhile, RBNZ’s Chief Economist Paul Conway said that “near-term price pressures will stay high.”
Additional comments
The economy is severely capacity constrained.
There is possibility for rebuilding to fan inflation.