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Significance
Annual consumer price inflation was 5.9% in the fourth quarter of 2021, its highest level since 1990. The RBNZ will tighten monetary policy in response while remaining aware that higher rates risk suppressing economic growth given the amount of mortgage debt that households have taken on during the pandemic.
Impacts
A tight labour market will continue during 2022 as New Zealand’s border re-opens only gradually, putting upward pressure on wages.
Credit conditions will tighten as banks adhere to tougher RBNZ and government restrictions that reduce their risk appetites.
A wave of the Omicron variant that is expected to peak in March will disrupt domestic supply chains and could push up prices.
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2022
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