There could be a prolonged period of faster inflation requiring a monetary policy response, courtesy of climate changesaid the Governor of the Reserve Bank of New Zealand (RBNZ), Adrian Orr, in a virtual press conference on Tuesday in Wellington after the central bank published a report on climate change.
“Some of the price pressures that we will see will lead to fairly sustained and higher generalized prices“.
“Yes we are seeing it in world food prices and in energy and transport prices, currently”.
“We will have to examine some very obvious price shocks, but to the extent that they are persistent and actually change the price of the basket of goods and services that we consume, then there will be monetary policy reactions“.
“We’ve all talked about them, we all knew they were coming, we all said they might be temporary.”
“Now the general discussion is surprising, these are persistent. Imagine that it continues now for the next 20 years. That is the world we will live in.”