The Committee agreed it remains appropriate to continue to tighten monetary conditions at a pace to maintain price stability and contribute to maximum sustainable employment. Core consumer price inflation remains too high and labor resources remain scarce, said the central bank in a statement.
The central bank uses the OCR to control inflation, encouraging people to either spend or save. The OCR is the interest rate the RBNZ pays on settlement accounts and is reviewed seven times a year.
Global consumer price inflation has continued to rise, albeit with some recent reprieve from lower global oil prices, it said, adding the outlook for global growth continues to weaken, reflecting the ongoing tightening in global monetary conditions.
In New Zealand, domestic spending has remained resilient to global and local headwinds to date. Spending levels are supported by a robust employment level, continued fiscal support, elevated terms of trade, and sound household balance sheets in aggregate, it said.
However, production is being constrained by acute labor shortages, heightened by seasonal and COVID-19-related illnesses. In these circumstances, spending and investment continue to outstrip supply capacity, and wage pressures are heightened.
A range of indicators highlights broad-based domestic pricing pressures, according to the central bank.
The Monetary Policy Committee members agreed that monetary conditions needed to continue to tighten "until they are confident there is sufficient restraint on spending to bring inflation back within its 1 to 3 percent per annum target range."
New Zealand's CPI inflation rate was 7.3 percent in the June 2022 quarter compared with the June 2021 quarter, according to the statistics department Stats NZ.
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