It was a pleasure to record a podcast with Andy Thompson last week. In a wide-ranging discussion we focused on inflation and the potential implications for interest rates within New Zealand. I highlighted that it’s pointless pointing the finger at who or what initially caused our current inflationary pressures – the key now is to make sure that expectations of future inflation don’t become unhinged.
Current economic uncertainty may leave the Reserve Bank to be slightly more cautious as to how it lifts interest rates, and there is going to be a role for ‘corporate responsibility’ from major businesses to take some of the price increases on the chin and not get too cheeky with their own pricing. Leadership on taming inflationary expectations is not only a challenge for the Government, but is also something where major corporates and their shareholders can be helpful to the cause.