The members of the Board of the Reserve Bank of New Zealand (RBNZ) decided to keep the Official Cash Rate (OCR) at the all-time low of 0.25% in August, against market expectations of a rise of 25 basis points.
Additional comments
It keeps the OCR unchanged at this meeting given the greater uncertainty with the country in a lockdown.
The least regrettable is the political stance to further reduce the level of monetary stimulus to anchor inflation and employment expectations.
Confident in meeting their inflation and employment competencies with less need for the current level of monetary stimulus.
Stay alert to the supply disruptions that COVID-19 can create, and the effect this can have on confidence.
Home prices are also above their sustainable level, increasing the risk of a price correction as supply increases.
Capacity pressures are now evident in the economy, particularly in the labor market.
Short-term consumer price inflation is expected to rise above the target range before returning towards the 2% midpoint around mid-2022.
The official cash rate is forecast at 0.59% in December 2021.
The official cash rate is forecast at 1.38% in September 2022.
The official cash rate is forecast at 1.62% in December 2022.
The official cash rate is forecast at 2.14% in September 2024.
The annual CPI of 2.2% is expected in September 2022.
About the RBNZ interest rate decision
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing its decision on interest rates and the economic assessments that influenced its decision. The central bank offers clues about the economic outlook and future policy trajectory, which are highly relevant to the NZD’s valuation. Positive economic developments and optimistic prospects could lead the RBNZ to tighten policy by increasing interest rates, which tend to be bullish on the NZD. Policy announcements are generally followed by Governor Adrian Orr’s press conference.
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