RBNZ’s Orr: Current price increases are proving more persistent

There could be a prolonged period of faster inflation that requires a monetary policy response, courtesy of climate change, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr warned at a virtual press briefing Tuesday in Wellington after the central bank released a report on climate change.

Key quotes

“Some of the price pressures we will see will lead to quite sustained, higher generalized prices.”

“We’re already seeing that in food prices globally and energy prices, transport, at present.”

“We will have to look through some very obvious price shocks but to the extent that they are persistent and truly changing the price of the basket of goods and services we consume, then there will be monetary policy reactions.”

“We’ve all talked about them, we all knew they were coming, we all said they may be temporary.”

“Now the general discussion is wow, these are persistent. Imagine that continuing now for the next 20-plus years. That is the world that we will be living in.”

Market reaction

NZD/USD is little affected by Orr’s comments, keeping its range around 0.7170, up 0.16% on the day.

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