By Lucy Craymer
WELLINGTON, May 29 (Reuters) – New Zealand interest rates are expected to rise “sooner rather than later”, Reserve Bank of New Zealand Monetary Policy Committee member Hayley Gourley said, after voting to hike at this week’s finely balanced policy meeting.
The RBNZ held the official cash rate at 2.25% on Wednesday after Governor Anna Breman used her casting vote to break a 3-3 split. Gourley, an agribusiness executive who started her term on the MPC last October, was one of three members who favoured a 25-basis-point increase.
“I think the track shows that we’re certainly expecting change sooner rather than later,” Gourley said in an interview with Reuters.
“From my perspective, it’s very much about what have we learnt, and will we learn in the five to six weeks before the next committee meeting in July … that will really determine the speed and the magnitude of change.”
She said she had wanted to raise rates in May because external shocks hitting New Zealand, including the Middle East conflict and rising inflation among trading partners, were likely to feed into domestic price pressures as businesses passed on higher costs.
“My view was that by increasing sooner rather than later, we had the best opportunity to keep inflation expectations anchored and therefore minimize the negative impact inflation may have for the economy,” Gourley said, adding an early move could allow future increases to be more gradual.
The RBNZ on Wednesday warned rates would need to rise sooner and by more than previously expected to counter inflation risks.
Gourley said her background in the primary and export sectors may have shaped her assessment of the economy, with regional New Zealand and exporters faring better than elsewhere in the country.
“I’m very cognizant of that two-speed impact,” she said.
Since Gourley joined the committee, the central bank has made changes that encourage MPC members to speak publicly about their views. How each member voted was also published for the first time in the minutes of the May meeting.
Gourley said she welcomed the greater transparency and “relished” the opportunity to present her perspective alongside the committee’s overall view.
(Reporting by Lucy Craymer; Editing by Stephen Coates)
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