RBNZ Chief Economist Conway Strikes A Hawkish Tone

RBNZ Chief Economist Paul Conway delivered a speech earlier this morning. Whilst the main area covered was around research and data quality, Conway gave a few updates on recent NZ economic developments. The comments struck a hawkish tone, particularly in light of the recent Q4 CPI data, see the full speech here.

• Conway commented on the recent downward GDP revisions: "the recent GDP revisions do not necessarily mean that capacity pressures in the economy are much lower than previously assumed." "Private demand in the economy, which is more interest-rate sensitive, has mostly been revised up, with stronger consumption and business investment than first reported "
• On immigration: "While GDP has been revised down, net inward migration continues to be revised up."
• On inflation: "...However, annual non-tradable inflation, which is a rough approximation of inflation generated within the New Zealand economy, came in at 5.9 percent, which is higher than we estimated."
• "To sum up, monetary policy is working, with the economy slowing and inflation falling. But we still have a way to go to get inflation back to the target midpoint."