Lower OCR around corner
Assistant Governor John McDermott told a meeting of the Bay of Plenty Employers and Manufacturers Association that inflation was expected to rebound in December and be at the bottom of the bank’s 1% to 3% target range.
New Zealand was being affected by international drivers, he said.
“There are several reasons for low inflation – both here and abroad. In New Zealand, tradeables inflation, which accounts for almost half of the CPI regimen, has been negative for the past four years,” he said.
“Much of the weakness in inflation can be attributed to global developments that have been reflected in the high New Zealand dollar and low inflation in our import prices. Strong net immigration and increased labour market participation have also boosted the supply potential of the economy, meaning that New Zealand has been able to grow at a robust pace without generating significant inflation.”
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