ASB predicting even higher inflation

The ASB has turned even more hawkish on inflation, estimating a peak of close to 6% at an annual rate by the end of this year.

Thursday, October 21st 2021, 3:00PM

by Eric Frykberg

It is blaming this on a perfect storm of high demand and constrained supply. 

These problems have been widely blamed on strong demand overseas, disrupted shipping schedules for imported goods and Covid-derived difficulties within New Zealand.

At 6%, this would be the highest annual rate for more than 30 years.

ASB adds inflation might still be outside the Reserve Bank's target rate into 2023.

ASB has joined ANZ in saying the Reserve Bank's base interest rate will rise to 2% before it stops going up, up from 1.5% previously. 

But the bank adds a rider: there remains a significant amount of uncertainty over the outlook, particularly further into 2022, and it has pledged to keep close tabs on the labour market and inflation anchors.

Tags: ASB

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