Adrian Orr: Doing whatever it takes to achieve low and stable inflation, and his ideal scenario for monetary policy in a year's time

<p>Reserve Bank Governor Adrian Orr says he's "extremely confident" the world is heading back to a period of low inflation, saying the central bank is prepared to do "whatever it takes" to achieve its mandate of low and stable inflation.</p><p>Speaking in in the latest episode of interest.co.nz's <a href="https://www.interest.co.nz/of-interest-podcasts" target="_blank"><i><strong>Of Interest podcast</strong></i></a><i><strong>, </strong></i>Orr talks about the reaction from financial markets to <a href="https://www.interest.co.nz/bonds/125443/reserve-bank-has-left-official-cash-rate-unchanged-55-warning-if-inflation-proves" target="_blank"><strong>last week's Reserve Bank monetary policy review</strong></a>, what its Monetary Policy Committee members will be watching between now and when they next review monetary policy on February 28, and what the Reserve Bank would need to see to be more relaxed about inflation.</p><p>"We just need to repeat we are willing to do whatever it takes to achieve our mandate, [of] low and stable inflation. If we get further inflation shocks there may be more work to do. So we're in a holding position, but we've made it clear where our nerves sit," Orr says.</p><p>"Basically we need to see more spare capacity in the economy to have the real confidence that the inflation pressures are coming off. All the indicators are moving in the right direction, but there's a lot of news still to arrive on the table."</p><p>He also talks about "historically significant" immigration, noting countries such as Australia, Canada and New Zealand, with strong net inward migration are "having the highest core inflation challenges."</p><p>With the new National-led government set to remove the Reserve Bank's requirement to "support maximum sustainable employment," from its monetary policy remit, Orr discusses how different monetary policy might have been over recent years if that hadn't been part of the Reserve Bank's mandate.</p><p>Orr also says profit-led inflation, businesses pushing through price increa