RBNZ’s Orr: It will be a brief recession

Dhwani Mehta FXStreet

Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr is speaking at the November post-monetary policy meeting press conference this Wednesday, endorsing the central bank’s hawkish 75 basis points (bps) Official Cash Rate (OCR) rate hike announced earlier on.

Key quotes

It will be a brief recession.

Wage and inflation expectations must fall.

Economic activity currently strong.

Spending currently strong.

Committee spent more time considering 75bp and 100bp hike, than 50bp.

RBNZ's Chief Economist Paul Conway said that “inflation expectations are higher than expected.”

Another RBNZ official said that the neutral interest rate has increased and that monetary conditions are not as contractionary.

“We're talking about a two- or three-quarters recession,” RBNZ policymaker Karen Silk said.

Additional comments

Are mature in a tightening cycle, closer to end than the beginning.
But new shocks are arriving all the time.
We are very eager to get to rate point where we can be sure inflation will be worn down.

Market reaction

NZD/USD is unfazed by Orr’s comments, keeping its range at around 0.6170, adding 0.47% on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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