New Zealand Monetary Policy

New Zealand

Central Bank keeps rates unchanged, but shifts closer to raising the OCR

At its 12 September monetary policy meeting, the Reserve Bank of New Zealand (RBNZ) decided to leave the official cash rate (OCR) unchanged at its record low of 2.50%.

The Bank stated that economic growth remains healthy due to rising consumption and that it will be reinforced by additional construction activity beyond Canterbury. Regarding price developments, the Bank noted that inflation remains low due in part to a strong New Zealand dollar. It stated that as economic growth strengthens inflation is expected to increase and move toward the mid-point of the inflation target (1%-3%). Meanwhile, the Bank pointed out that housing prices remain high and that the restrictions announced on 12 August to curb residential mortgage lending are expected slow house prices.

The Central Bank's statement contained a slight shift regarding interest rates hikes, specifying that OCR increases are likely "next year", rather than simply "in the future" as it had previously stated.

The majority of FocusEconomics panelists expect the Bank to maintain the official cash rate stable this year, with an average forecast of 2.58%. For 2014, participants see interest rates ending the year at 3.31%.

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New Zealand Monetary Policy Chart

New Zealand Monetary Policy September 2013

Note: Official Cash Rate (OCR) in %.
Source: Reserve Bank of New Zealand.

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