Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr addressed the post-monetary policy meeting press conference on Wednesday. Despite holding the interest rate steady at 5.50% for the fifth consecutive meeting in November, Orr emphasized a projection showing an upward bias to rates, cautioning it’s not a done deal.

During the meeting with the new Prime Minister, Orr described the interaction as highly constructive. He reiterated the central bank’s steadfast commitment to maintaining rates through the next year. Acknowledging a robust discussion about rates, Orr expressed nervousness about inflation persisting outside the band for an extended period.

Highlighting the concern that longer-term inflation expectations are on the rise, Orr disclosed discussions about raising rates at the recent meeting. The global rates, particularly concerning the US outlook, were emphasized as significant. Orr conveyed the central bank’s intention to make a decision on debt-to-income restrictions early next year.

Addressing the market reaction, Orr’s comments influenced NZD/USD, consolidating its upsurge around 0.6190. The currency pair, currently trading at 0.6193, reflects a 0.96% increase on the day.

Notably, the central bank emphasizes that it observes a rapid slowdown in credit growth, highlighting that market participants are heeding their message on rates. Orr asserted that rates need to remain high for a considerable time, urging banks to listen. Despite asserting the flexibility to act on shocks if needed, Orr expressed current comfort in waiting until the February meeting.

The domestic inflation challenge, with dwelling costs exerting a substantial impact, continues to be a focal point. Orr concluded with a reminder that the central bank, not bound by policy meeting dates, emphasizes its ability to respond promptly to unforeseen developments.

Conclusion:

In conclusion, Governor Adrian Orr’s insights provide clarity on rates, inflation, and the global economic landscape. Stay informed for strategic decision-making.