The governor of the Reserve Bank (RBNZ), Adrian Orr, says New Zealand still has more work to do to combat inflation but it's getting there.
He said compared to much of the world the economy was in an excellent position with the bank having started raising rates before many other countries.
"We still have some work to do but the good news is because we've done so much already the tightening cycle is very mature, it's well advanced," Orr told a seminar launching the Council of Trade Unions' Alternative Economic Strategy.
The RBNZ has raised the official cash rate (OCR) for seven consecutive reviews since last October taking the benchmark rate from 0.25 percent to 3 percent, and is expected to raise it again by another 50 basis points next week.
Orr said inflation at 7.3 percent was too high but it was coming down, and New Zealand was in an "excellent" position compared with many other economies, although he conceded that wages were being "challenged" by inflation.
"We've got a little bit more to do before we can drop to our normal happy place, which is to watch, worry and wait for signs of inflation up or down."
He said the United States' aggressive moves to raise interest rates were causing a capital drain around the world, with money flowing to buy US assets.
Orr noted that the decline of the New Zealand dollar was due to the increase in the US dollar as people moved their capital back into the United States as it was perceived as safe.
"Money is flowing to where the highest yield is, it also creates broader uncertainty which generates volatility and concern which reinforces the desire of people to have capital back in the US [as] a perceived safe place.
"In terms of a declining New Zealand dollar, almost every currency in the world is declining against the US dollar."
