The Governor of New Zealand’s Reserve Bank: the tightening cycle is “well advanced”

In terms of containing inflation the Reserve Bank of New Zealand still has some work to do, however the bulk of the hard work is over, RBNZ Chairman Adrian Orr said.

"We think we still have some work to do, but the good news is that we have already done so much, the tightening cycle is well advanced," Orr said at an event on Tuesday in Wellington.

The Reserve Bank "has a little more work to do before we can move on to our usual state, which is to watch, worry and wait for signs of rising or falling inflation," he said.

The RBNZ has raised the official cash rate from 0.25% to 3% over the past year, and it is now expected to rise to at least 4% by the beginning of 2023 in order to sufficiently cool the economy and curb price pressure.

Orr said demand "will slow down."

According to him, although inflation of 7.3% is "too high," the inflation rate in New Zealand is lower than in many other countries.

He also noted that while the New Zealand dollar, along with "almost all currencies in the world," is falling against the US dollar, raising the cost of imports, many supply-side restrictions are easing.

In a relative sense, New Zealand "is in a very strong position," he said. "We got through it very well."

The next RBNZ decision on the rate will be made on October 5.