New Zealand Monetary Policy

New Zealand

Central Bank leaves rates unchanged

At its 26 July monetary policy meeting, the Reserve Bank of New Zealand (RBNZ) maintained the official cash rate (OCR) unchanged at a record-low 2.50%, in a decision that was in line with market expectations. The Bank's decision means that officials have left the main monetary policy rate unchanged for 16 months. In its statement, the Bank continued to asses that the outlook of some of New Zealand's trading partners, particularly several Eurozone economies, remains bleak. That said, the RBNZ underlined that economic activity will grow modestly over the next few years. Rising housing activity due to low interest rates and reconstruction in Canterbury are expected to provide a boost to economic growth. On the other hand, the Bank anticipates that fiscal consolidation and fluctuations in the exchange rate will likely constraint growth in domestic demand. Regarding price developments, the RBNZ stressed that annual inflation, which currently stands below 2.0% is expected to settle near the mid-point of the target range and therefore it remains appropriate for the OCR to be held at 2.50%. The next monetary policy meeting is scheduled for 13 September.


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New Zealand Monetary Policy Chart

New Zealand Monetary Policy July 2012

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

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