Inflation returns to a sustainable target band

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr addressed a New Zealand Parliament committee on Thursday morning, saying New Zealand’s central bank was maintaining an appropriately accommodative policy stance and the RBNZ was likely looking to assess when to adopt new discounts.

Key highlights

CPI sustainably returning to the 1-3% target range

Current economic conditions are bad

New Zealand needs to increase its potential growth rate

Fiscal policy should boost potential growth

Waiting for a longer period was pointless.

Policymakers aim to reduce output fluctuations

Policy discussions going forward will focus on maintaining or reducing rates.

Considers sufficient measures taken to control inflation

CPI requires more frequent reweighting

Using high-frequency data to improve CPI and GDP estimates