ZB

Christina Leung: There is risk of a wage-price spiral developing

Author
Newstalk ZB,
Publish Date
Wed, 25 May 2022, 6:21pm
(Photo / Getty)
(Photo / Getty)

Christina Leung: There is risk of a wage-price spiral developing

Author
Newstalk ZB,
Publish Date
Wed, 25 May 2022, 6:21pm

The Official Cash Rate has reached a six-year high at two percent. 

It rose 50 basis points today. 

NZIER principal economist Christina Leung told Heather du Plessis-Allan another double hike's likely in July. 

She says the Reserve Bank has a tricky balancing act as it tries to quell inflation, which is sitting at 6.9 percent.  

“There is a risk of a wage-price spiral developing, so that’s when workers seek higher wages to make up for the increase in living costs and businesses start to put up prices in anticipation of that high inflation down the track.” 

The Reserve Bank expects the OCR to be 3.25 percent by the end of the year. 

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