An Excessive Increase in OCR at a Hasty Pace Results in a Significant Slump.
Reserve Bank of New Zealand Governor Adrian Orr has called for inflation to be brought back to a target range at a reasonable pace, addressing the NZ Economics Forum at Waikato University. Orr warned that official cash rates that were lifted too steeply could lead to a collapse in spending and investment, reducing exports and increasing exchange rates. He also noted that other issues around financial stability and unnecessary volatility made the balancing act to achieve New Zealand’s targets harder.
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