RBNZ’s Orr: Core inflation too high, expectations elevated

The Reserve Bank of New Zealand’s governor, Adrian Orr has said that core inflation is too high and that expectations are elevated.

Orr has voiced concerns over the difficulties people faced paying for goods and services while power, communications and services were down in flood-affected regions.

Orr indicated he was not happy with the inability of some banks to continue providing services in the wake of the cyclone, saying he had heard “some horrific stories”.

Orr is speaking at the Finance and Expenditure Committee on points related to the February Monetary Policy Statement.

Key Quotes

Rebuild activity may add to inflationary pressure.

Monetary conditions need to tighten further.

“When people lose the ability to transact, when they don’t have a means of exchange, then social cohesion is very quickly challenged,” he said.

“There’s nothing more distressing than seeing a cafe serving hot coffee beside a bank whose ATM doesn’t work – one had a generator,” he said, appearing to suggest banks should have been better prepared.