RBNZ's Conway: Inflation to return to 2% over medium term

Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said on Tuesday that the central bank is not discussing a shift to a tightened policy stance, adding that inflation is to return to 2% over the medium term. 

Key quotes

Middle East conflict complicates monetary policy like all supply shocks. 

Grasping firm responses to cost shocks key to maintaining low, stable inflation. 

Despite lower oil prices, shock effects to linger in economy. 

Middle East developments last week indicate upside risks to September quarter forecast. 

Monetary policy can stop initial price impacts from turning into ongoing inflation pressure. 

Medium-term inflation expectations stay firmly anchored. 

Extra capacity in economy likely to curb pass-through. 

Additional easing of monetary stimulus probably needed. 

Central bank will act if inflation from Middle East conflict proves persistent. 

MPC reached consensus last week, no vote needed.

We are not discussing shift to tightened policy stance. 

Inflation to return to 2% over medium term. 

Recent PMI data upbeat, lifted our GDPNow projection. 

Market reaction  

At the press time, the NZD/USD pair is down 0.09% on the day to trade at 0.5756.