HSBC Chief Economist Paul Bloxham spoke about the formidable difficulties in tackling sticky high-inflation at FINSIA’s latest in-person event in New Zealand.
While he does not think another rate rise is imminent when the RBNZ meets early next month, the prominent forecaster pointed towards the unprecedented challenges facing the global economy for the reasons why rates are likely to remain high for some time.
Deglobalization, an aging population, supply chain disruptions, and the shift to renewable energy sources are all contributing factors, he said.
Following the seismic shock to the global economy that came as a result of COVID - when massive stimulus packages were followed by supply-side issues, including disruptions in Asian factories and shipping delays – the 2%-3% inflation target is unlikely in the near future, he added.
“Interest rates aren’t going down any time soon. The sooner we can focus on improving the supply-side, the sooner the central bank can consider that it doesn’t need to keep higher interest rates,” Mr Bloxham told the audience at the networking breakfast in Auckland.
Noting that the RBNZ was the first central bank to raise interest rates, he thinks monetary policy has done as much as it can.
It is down to tackling wage inflation and developing the tools that can successfully manage supply-side challenges, such as climate change and energy transition.
FINSIA’s New Zealand National Council Chair Bernard McCrea thanked Paul for his ‘terrific, insightful presentation’, adding: “It was a real pleasure to be in Auckland to hear from such an eminent economist.
“Networking and knowledge events like this are what FINSIA stands for - providing access to leaders with expert insights and facilitating ongoing professional development.
“They are important for individual professionals as well as the financial services industry as a whole.
“We are looking to holding many more events like this – and the evening we had with Grant Robertson in Wellington earlier in the month.”
Look out for more in-person FINSIA events here