Cameron Bagrie: Independent Economist on the OCR being held at 2.25%

An economist is pointing out a potential problem with the Reserve Bank’s economic forecast. 

The Monetary Policy Committee, chaired by Anna Breman, has decided to keep the OCR unchanged at 2.25% for now. 

It says while inflation is above the target band, the economy still needs some time to recover. 

Cameron Bagrie told Ryan Bridge that the problem with the Reserve Bank’s forecast is the assumed uptick in productivity growth. 

He says they’re assuming the supply side capacity, via productivity growth, will improve, which will keep inflation lower, but if we can’t get supply side capacity up, inflation will prove to be a lot stickier.  

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