Reserve Bank Chief Economist Paul Conway has expressed concern over New Zealand’s inflation expectations, which remain above the central bank’s 2% target midpoint. In notes for a speech delivered in Sydney on Tuesday, Conway highlighted that both 5- and 10-year inflation expectations are nearing levels last seen when headline inflation exceeded 7% post-Covid.
Conway emphasized that these expectations will be a critical factor for policymakers as they prepare for the December interest rate decision. He noted that the data he referenced is somewhat outdated and expressed eagerness to review updated figures before the rate-setting meeting.
The remarks come amid growing scrutiny over inflation trends, with Conway’s comments underscoring the importance of monitoring long-term economic indicators. His concerns suggest that the Reserve Bank may need to carefully assess inflation dynamics before making any adjustments to monetary policy.