RBNZ: Conway - Tariffs To Dampen Medium Ter Inflation, RBNZ Ready To Act

RBNZ Chief Economist Pail Conway has delivered a speech earlier today in Wellington NZ. It focused on the impact of tariffs. Some key snippets from the speech are outlined below. The key take away from a monetary policy standpoint is that Conway reiterated the recent monetary policy stance: "As outlined in the July Monetary Policy Review, the Committee sees scope to lower the OCR further if medium-term inflation pressures continue to ease as projected, Mr Conway says." (see the full speech at this link). 

• "Global tariffs and economic uncertainty are likely to mean less inflation pressures in New Zealand and a pullback in business investment and household spending, RBNZ Chief Economist Paul Conway says. However, the economy is currently supported by high export prices and lower interest rates, he says."
• "Tariffs may make global supply chains less efficient and could nudge up the cost of imports. This is why tariffs are expected to add to inflation pressures in the US.  But for New Zealand, the main impact is likely to be weaker global growth, which could reduce demand for our exports and lower import prices. Import prices could fall further as other countries redirect their exports away from the US. This is expected to reduce inflation pressures here.
• At the same time, uncertainty is elevated, making it harder for households and businesses to plan. “When businesses aren’t sure what’s coming, they hold off hiring and delay big investments. Households tend to respond to increased uncertainty by putting off big spends or job moves,” Mr Conway says.
• “There’s a whole lot of ‘wait and see’ going on out there right now.”
• “On net, these developments are expected to slow New Zealand’s economic recovery over mid-2026 and reduce medium-term inflation pressures. This is against a backdrop of strong export prices, especially for dairy and beef, and lower interest rates. "