Chief Economist of the Reserve Bank of New Zealand (RBNZ) Paul Conway gave a speech on inflation during the early Wednesday market session, noting that inflation troubles exist on both sides of the RBNZ's policy stance.
Key highlights
Inflation may be stickier in the short-term.
However, inflation could fall more quickly than expected in the medium-term, as spare capacity emerges in the economy, which would help.
Challenges remain to bring inflation back to RBNZ target levels.
A period of restrictive policy is necessary to give confidence that inflation will return to target over a reasonable timeframe.
Slowdown in food price inflation is satisfying.
Inflation needs to remain in target range sustainably.
OCR decline timing cannot be accurately predicted.
Period of low inflation has returned, but short-term economic pain is being experienced.
