Still More Work To Do To Anchor Inflation Expectations

RBNZ Governor Orr gave a speech earlier today in NZ. Note Governor Orr didn't touch on the rates outlook in the speech.

• The Governor stated: "Tackling these persistent inflationary pressures and bringing levels of ‘core’ inflation in line with our 1 to 3% target is an important part of bringing inflation back down to the 2% midpoint."
• "In this context, a flexible approach to inflation targeting, with a medium-term focus, remains appropriate. This provides the Monetary Policy Committee with the ability to weigh different considerations when responding to shocks to the economy. The Reserve Bank believes that the current 2% mid-point inflation target remains appropriate for New Zealand."
• “2% continues to strike the right balance between the costs and benefits of inflation,” Mr Orr says. “A focus on 2% appears to be consistent with an ‘optimal’ level of inflation.”
• He added: "Non-tradable inflation is slowly moving in the right direction", But that "We’ve got more work to do to have inflation expectations truly anchored at that 2% level. This is the part where capacity pressures and inflation expectations are the monetary committee’s real focus.”
• You can see the full speech at this link.