FILE PHOTO: Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington, New Zealand, July 3, 2017. REUTERS/David Gray/File Photo
February 8, 2018
WELLINGTON (Reuters) – The Reserve Bank of New Zealand’s view that core inflation is a little below target and needs stimulatory policy to reach the midpoint of the target range has not changed significantly in the past few quarters, Assistant Governor John McDermott said.
“Core inflation is sitting a little bit below the midpoint… it still needs a little shove to get it towards the midpoint. That strategy hasn’t changed,” McDermott said in an interview with Reuters after the RBNZ’s policy review was released on Thursday.
At its review, the RBNZ held interest rates steady at a record low of 1.75 percent, as expected.
McDermott said revisions to GDP data for 2015 and 2016 that showed the economy had grown more than thought while inflation remained moderate suggested the “speed limit” for the economy was higher than thought.
“We’ve moved the speed limit of what this economy can achieve without generating inflation, and it’s moved upwards.
“We thought maybe it had fallen to around 2.5 (percent), now we’re more comfortable it sits near three now,” he said.
(Reporting by Charlotte Greenfield and John Mair; editing by Richard Pullin)
