The Reserve Bank governor says the Monetary Policy Committee spent considerable time discussing the possibility of hiking the Official Cash Rate.  

It has again held the Official Cash Rate at 5.5%, where it's been for a year.  

Inflation has fallen to 4%, but is still above the target of a 1-3% band.  

Adrian Orr told Mike Hosking that the talk about hiking the OCR is real.  

"The disappointing part is how stubborn domestic inflation remains.

"We don't determine productivity we just deal with the product we've got."

Orr said "inflation for large parts of the economy has fallen" but we are now at the "stubborn tail, which is not surprising."

Hosking said councils are crazy and out of control, and Orr said he wouldn't comment on councils.

"The biggest risk we run is not getting inflation low and stable," Orr said.

"We have to use the tools we have... we run monetary policy, we don't run councils."

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Hosking said Orr has "hit the end of the road," saying that there’s little more the Reserve Bank can do except completely stuff the economy by raising rates. 

Orr’s response was: "that is a statement." 

He told Hosking that they’re very confident we’ll be in very low and stable inflation at 2%. 

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