Reserve Bank of New Zealand’s (RBNZ) Assistant Governor Karen Silk expressed confidence that inflation will eventually converge with the central bank’s 2% target, despite the current elevated levels. Speaking at a recent event, Silk reassured that the RBNZ’s current policy settings are geared toward achieving this goal, though she acknowledged the challenges posed by both domestic and global economic factors.
New Zealand, like many other economies, has been battling persistently high inflation, driven by factors such as supply chain disruptions and rising costs of goods. While inflation remains above the RBNZ’s target, Silk emphasized that the bank’s monetary policy tightening is showing signs of success, and the central bank remains committed to its inflation target.
Silk’s confidence mirrors that of other central bankers globally, who are walking a tightrope between curbing inflation and avoiding an economic downturn. With interest rates already at restrictive levels, the market is closely watching the RBNZ for any indication of future rate hikes or potential pauses in the current cycle. Silk hinted that the current settings may remain in place for some time to ensure inflationary pressures fully subside.
As the RBNZ navigates through economic headwinds and global uncertainties, the path to 2% inflation may not be straightforward, but Silk’s reassurances suggest the bank is committed to its long-term goal.
