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New Zealand has had a long-standing reputation for its low and stable inflation levels. However, recent years have seen inflation rise higher than the country’s central bank target range of 1 to 3 percent, with a recent peak of 3.3 percent in the June 2021 quarter. In light of this, Chief Economist Paul Conway outlines the path back to low inflation in New Zealand. Conway believes that the recent inflation spike is largely due to temporary factors such as global supply chain disruptions and higher oil prices. These factors have led to increased costs for businesses, which have subsequently been passed on to consumers in the form of higher prices. In order to bring inflation back down to the target range, Conway suggests that the Reserve Bank of New Zealand (RBNZ) should maintain its current monetary policy stance. This includes keeping the official cash rate (OCR) at the record low of 0.25 percent and maintaining the Large Scale Asset Purchase (LSAP) program. Conway also highlights the importance of ongoing wage growth moderation. While wages have increased in recent years, they have not kept pace with rising inflation. Moderation in wage growth can help to alleviate cost pressures for businesses, which in turn can help to ease inflationary pressures. In addition to these measures, Conway suggests that policymakers should address supply-side issues such as labor market constraints and regulatory inefficiencies. Addressing these issues can increase the economy’s potential output, which can help to ease inflationary pressures in the long run. Conway acknowledges that bringing inflation back down to the target range will not be an easy task, but he believes that with careful management of monetary policy and ongoing structural reform, it is achievable. Overall, Conway’s approach to reducing inflation in New Zealand involves a combination of short-term policy measures and long-term structural reform. It is hoped that this approach will help to bring inflation back down to the target range and maintain New Zealand’s reputation for low and stable inflation levels. https://inflationprotection.org/chief-economist-paul-conway-on-how-new-zealand-can-achieve-low-inflation-once-again/?feed_id=93164&_unique_id=644f5b9a2c844 #Inflation #Retirement #GoldIRA #Wealth #Investing #InvestDuringInflation
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