Monetary Policy and Inflation

These flashcards cover terminology and concepts related to monetary policy and inflation, essential for understanding the economic discussions presented in the lecture.

Official Cash Rate (OCR)

The interest rate set by the Reserve Bank of New Zealand, influencing monetary policy and inflation.

Inflation

The rate at which the general price level of goods and services rises, eroding purchasing power.

Interest Rate Hike

An increase in the OCR aimed at controlling inflation.

Global Inflation Pressures

Factors driving inflation globally, including supply disruptions and high commodity prices.

Consumer Spending

The total money spent by consumers on goods and services.

Monetary Tightening

A policy to increase interest rates in order to reduce inflation.

Supply Disruptions

Obstacles that prevent the supply of goods and services from meeting demand, contributing to inflation.

Fiscal Policy

Government spending policies that influence economic conditions, including inflation.

GDP

Gross Domestic Product, a measure of the economic performance of a country.

Monetary Policy Transmission

The process through which monetary policy decisions affect economic activities and inflation.

Downward Pressure on Prices

Factors, such as slowing growth and asset price declines, that contribute to reduced inflation.

Upward Pressure on Prices

Factors, such as increased demand and supply constraints, leading to rising inflation.

Resilient Household Balance Sheets

Strong financial positions of households that support consumer spending.

Neutral Interest Rate

The interest rate level that neither stimulates nor restrains economic growth.

Expectations Anchoring

The practice of maintaining stable inflation expectations for effective monetary policy.

Seasonal Illness Impact

Flu and other seasonal health issues that disrupt labor supply and contribute to inflation.

Inflation Targeting

A central bank policy aimed at maintaining price stability by targeting a specific inflation rate.