Reserve Bank chief economist Paul Conway. Photo: Supplied
The Reserve Bank's chief economist looks to have dampened expectations of interest rate cuts any time soon.
In a keenly awaited speech, Paul Conway said the rapid rises in the official cash rate (OCR), which took the OCR to 5.5 percent and stopped in May, were having the intended effect of cooling inflation, as shown by the recent data where the annual rate slowed to 4.7 percent.
"Monetary policy is working, with the economy slowing and inflation falling. But we still have a way to go," he said in an online presentation.
Conway explicitly steered away from commenting on how the slower inflation numbers and the surprise contraction in the economy might affect future rate decisions, saying only that the Monetary Policy Committee would have more to say in its first monetary statement of the year at the end of next month.
"I'm being very careful here, I'm not going to give away anything about the future path of the OCR."
But he pointedly said the surprise 0.3 percent economic contraction in the September quarter did not necessarily mean demand had been significantly reduced, and that non-tradable inflation - a measure of domestic price pressures - remained high and there was "more work to do" to get it down.
In its November monetary statement, the RBNZ signalled no rate cuts are likely before the middle of 2025, although financial markets have been pricing in at least two cuts this year, possibly as soon as May.
Conway said strong migration gains over the past year have been underpinning demand and rises in rents and rates.
ANZ chief economist Sharon Zollner said Conway's speech gave little away.
"Overall, the data commentary can be described as factual, played with a straight bat, carefully worded to keep all options open in terms of where the February MPS lands, but certainly not dovish."
The next significant economic numbers are employment and wages on 7 February.
