Limiting migration 'well out of my decision-making parameter' - Reserve Bank Governor Adrian Orr

The Reserve Bank Governor says whether New Zealand should introduce measures to bring down record net migration are "well out of my decision-making parameter".  

Prime Minister Christopher Luxon pledged before the election to boost migration and said in September the National Party wanted "the world's best talent to be able to come here to New Zealand".  

But the Reserve Bank (RBNZ), in its monetary policy statement on Wednesday, said while population growth was easing supply constraints, "the effects on aggregate demand are becoming apparent". 

"This is increasing the risk of inflation remaining above target," the central bank said.  

The overall impact of high net immigration was "uncertain" but appeared to have put rents under the pump, the RBNZ said. 

Data released by Statistics NZ last month showed a record number of migrants were moving to New Zealand - with a gain of 110,200 in the year to August.

RBNZ Governor Adrian Orr, speaking to AM on Thursday, said while spending per person had declined due to high interest rates, "there are more people spending". 

"There's still that aggregate pressure on the economy - on the inflation pressure - so that's given us cause for concern," he said.  

Orr said the RBNZ needed to continuously update and monitor interest rates "to get that inflation out of the system".  

Asked what his message to the new Government was on immigration, Orr said it was a "real challenge".  

He noted there was "no target and no means of targeting" when it came to immigration.  

Responding to questions from AM host Ryan Bridge about whether the Government should limit immigration, Orr said that was "well out of my decision-making parameter".  

"We can control how many people come into the country but we can't control how many people leave or Kiwis returning back, so that's just the natural side. It's not unique to New Zealand - you're seeing the same pressures in Australia, Canada and where it impacts immediately, really, is around both the supply side of our economy... but, on the demand side, people need places to live; they are going to go about spending."  

Adrian Orr.
Adrian Orr. Photo credit: Getty Images

Orr said it could still be some time until the official cash rate comes down, with inflation remaining a huge threat.   

The baseline interest rate was held at 5.5 percent on Wednesday and Orr said while he couldn't predict the future, there may not be a rate cut until mid-2025.