Alan Bollard Domestic Quotations

Given the time it will take to bring inflation back towards the mid-point of the target band, we do not expect to be in a position to ease policy this year. Any earlier easing would require a more rapid reduction in domestic inflation pressures than the substantial slowing already assumed in our projections.

The decline in the exchange rate will either be gradual, as domestic spending pressures ease, or it will be more abrupt as global investors reassess New Zealand as an investment destination.

We have seen ongoing momentum in domestic demand and persistently tight capacity constraints, ... We remain concerned that inflation pressures are not abating sufficiently to achieve our medium-term target.

The correction of these imbalances and associated inflation pressures will require a slowdown in housing, credit growth and domestic spending, ... We also expect a significantly lower exchange rate.