The RBNZ Monetary Policy Committee voted to raise the Official Cash Rate (OCR) from 5.25% to 5.50%.
They said:
The combination of weaker demand and improved supply has reduced inflation in New Zealand. Annual consumers price inflation declined from 7.2% in the December 2022 quarter to 6.7% in the March 2023 quarter. Prices for some goods and services that change a lot — such as petrol prices and airfares — have also declined.
Inflation declined by more than expected, but it remains too high. While many measures of inflation expectations have declined in the last 3 months, they remain elevated. Most measures of persistent or ‘core’ inflation have stayed near recent peaks. Inflation is expected to take some time to return to the mid-point of the MPC’s 1 to 3% target range.
Inflationary pressure continues to be supported by a tight labour market, with employment above its maximum sustainable level. The unemployment rate remained very low at 3.4% in the March 2023 quarter. Although most indicators show that labour market pressures have eased since last year, they remain strong.
Overall, high interest rates are still needed to further slow demand. This will help to reduce upward pressure on prices, leading to lower headline inflation.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
