The coming recession?

The Reserve Bank has just raised interest rates and is talking about raising them further early next year. Asked, the Governor of the Reserve Bank, Adrian Orr, stated that the Bank is ‘deliberately trying to slow aggregate spending in the economy. The Reserve Bank, and others, expect the slowdown will cause a recession early next year, which in this context probably means negative economic growth and higher unemployment. The Bank has indicated that it is uncertain whether the recession will be long and shallow or short and sharp. It also reminds us that the Reserve Bank is not able to make very precise interventions either in terms of magnitude or timing.