The bank has a "laser-like" focus on controlling inflation, he says
The Reserve Bank of New Zealand can get inflation under control as the nation battles a tight labour market, RBNZ Governor Adrian Orr told the government's Finance and Expenditure Committee meeting on Thursday.
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Orr said: “Around our confidence of having inflation under control, that is very high because we control the end outcome through the interest-rate environment,” Reuters reported.
New Zealand inflation surged to 7.2% in the third quarter of 2022, well above the bank’s target of between 1% and 3%.
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RBNZ has a “laser-like” focus on controlling inflation, Orr said.
Since 2021, the bank has hiked the OCR from 0.25% to 3.5% and has signalled further rises. The market is pricing in a 70% chance of a 75-basis-point hike in November.
A tight labour market led to wage inflation in the third quarter to increase to the highest level since 1993, when the survey began.
The RBNZ official said the tight labour market was also the biggest constraint on businesses in New Zealand.
Orr said the current challenge is “there is a labour shortage globally and it’s the most competitive market for resources internationally,” Reuters reported.
