Orr Admits the Reserve Bank Is Engineering a Recession and Asks that You Believe in Your Heart that There's No Inflation

November 24, 2022

Orr told Parliament’s Finance and Expenditure select committee it was correct that the Reserve Bank was engineering a recession, saying it was deliberately trying to slow spending in the economy.

“There will be a likely rise in unemployment, but it may be a job-rich slowdown because of the severe lack of labour in the economy at the moment,” he said.

“If we are successful, we slow down and inflation comes out, it would mean that ‘per capita’ consumption is still in real terms at the levels pre-Covid in 2019 and participation in employment is still very high.”

But commenting further on the recession risk, Orr said the power lay in the hands of the public, who could reduce the need for an economic contraction if they collectively cut their spending and assumed inflation would fall, for example when negotiating pay rises.

“The power is in the hands of the people. You know, if you just start behaving, ‘1% different’ around inflation expectations and wage growth that makes our job easier. We don’t have to pay that cost.”