TLDR & TLDL: The Reserve Bank could have done a lot more yesterday to shock the economy down into a lower inflationary path, but chose instead to use its words and forecasts more than its tools of much higher interest rates. In my view, that’s a good thing because it gives the central bank time to be absolutely sure the underlying inflationary impulse post Covid has actually shifted higher.
(See my full analysis below the paywall fold and in the podcast above for full paid subscribers, including my exchanges with Governor Adrian Orr in the news conference)
Elsewhere in the news today:
Chris Hipkins and Ashley Bloomfield have just announced a move to ‘Phase III’ of the omicron response, which will mean only household contacts of positive cases will need to self-isolate and symptomatic people and essential workers will finally be given RATs from GPs, pharmacies and testing centres, and others can buy them at stores;
clashes between Police and protestors around Parliament escalated overnight when a concrete bollard was moved to allow a fresh procession of 30 cars to enter the occupied area in the streets around the Parliamentary precinct (NZ Herald); and,
The United States and the European Union banned secondary market trading of Russian bonds issued from March 1 overnight, but the fresh sanctions were seen as ineffective, given Russia is running budget surpluses and has built up US$630b in foreign reserves in preparation for such sanctions. (CNBC)
I’m in Auckland today working on podcasts so wasn’t able to do another pop-up hoon on the MPS. Have a listen instead to those news conference excerpts in the podcast above.
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