Lucy Craymer

WELLINGTON (Reuters] – The Reserve Bank of New Zealand has stated its policy toward containing inflation expectations. They expect to increase interest rates in future quarters.

Adrian Orr, the bank governor said Tuesday that if we go too slow it will be inflation expectations. At the moment the balance in risks is geared towards restricting inflation expectations in medium-term to remain within our target range.

He said that the central bank was aware of the danger of inflation expectations being misplaced.

He also said that too rapid or high a rate can lead to a slower than necessary slowdown in economic activity.

New Zealand’s central banks raised interest rates 50 basis points to 1.50% on Wednesday. It is its fourth increase in a row and tries to lessen the second round effects of sharply increasing inflation.