Expecting More Inflation and a Year Long Recession, Reserve Bank Hikes Interest Rate 0.75% to 4.25%
November 23, 2022
PHOTO: AARON WOOD/STUFF
Reserve Bank governor Adrian Orr said the bank’s monetary policy committee, which he chairs, agreed the OCR needed to reach a higher level to ensure inflation returned to within its target range.
Annual inflation was last measured by Stats NZ at 7.2%, but the Reserve Bank is forecasting it will rise still higher, to 7.5% in the December and March quarters, before dropping to 5% by the end of next year.
It is also forecasting four consecutive quarters of mild GDP decline, commencing in the three months to the end of June, and another six months of zero growth after that.
The Reserve Bank forecasts suggested the economy would contract by a total of 1% over that period.
“Core consumer price inflation is too high, employment is beyond its maximum sustainable level and near-term inflation expectations have risen,” Orr said.