By Lucy Craymer
WELLINGTON (Reuters) – The Reserve Bank of New Zealand said committee policy is currently weighted toward containing inflation expectations and expects to put into effect more interest rate increases in coming quarters.
“If you go too slow, it’s inflation expectations that will get away from us and at the moment the balance of risks as far as the Monetary Policy Committee is concerned is very much weighted toward constraining those inflation expectations in the medium term to be within the target range,” bank Governor Adrian Orr said in a recorded interview with the International Monetary Policy released on Tuesday.
He added the central bank was very aware of the risk of letting those inflation expectations get away.
However, he added that if the rate goes too fast or too high one runs the risk of having a sharper than needed slowdown of economic activity.
New Zealand’s central bank raised interest rates by a hefty 50 basis points to 1.50% last Wednesday, its fourth hike in a row as it seeks to reduce any second-round effects from sharply rising inflation.
(Reporting by Lucy Craymer; editing by Jonathan Oatis and Sandra Maler)