RBNZ Determined to Head Off Low Inflation, Deflation: Orr

The video discusses the economic challenges posed by COVID-19, focusing on the importance of maintaining monetary stability by preventing low inflation and deflation. It explains the pragmatic reasons behind setting inflation targets and highlights the risks of low inflation expectations leading to further economic issues. The video also addresses the challenges of deflation and high unemployment, emphasizing the need to achieve sustainable employment and stable inflation.

What is the primary focus of maintaining monetary financial stability during the COVID-19 economic challenges?

• Reducing taxes

• Increasing government spending

• Preventing unnecessary low inflation and deflation

• Raising interest rates

Why is it important to maintain a 1-3% inflation rate according to the transcript?

• To reduce unemployment

• To boost exports

• To avoid a cycle of decreasing inflation expectations

• To increase consumer spending

What can happen if people do not believe in the inflation targets?

• Inflation rates will stabilize

• Unemployment will decrease

• Inflation expectations will increase

• A cycle of decreasing inflation expectations may occur

What is a potential consequence of deflation as mentioned in the transcript?

• Improved economic growth

• Higher interest rates

• Increased consumer confidence

• Unique challenges and high unemployment

What is the ultimate goal in addressing low inflation and unemployment?

• To achieve maximum sustainable employment

• To increase government revenue

• To reduce public debt

• To enhance international trade