New Zealand Monetary Policy

New Zealand

Central Bank to maintain interest rates at record-low through 2013

At its 24 April monetary policy meeting, the Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record-low of 2.50%, a move that was in line with market expectations. The Bank's decision marks two years in which the main monetary policy has remained unchanged.

In its statement, the Bank argued that "growth in the New Zealand economy has picked up. Consumer spending has increased and rebuild activity in Canterbury is gaining momentum", although the Central Bank acknowledged that "fiscal consolidation is constraining aggregate demand". In addition, monetary authorities pointed out that inflationary pressures remain contained, as a strong New Zealand dollar continues to weigh on inflation.

The RBNZ stated that the New Zealand dollar remains overvalued, partly reflecting the quantitative easing program announced by Japan. Against this backdrop, monetary authorities stated that "at this point, we expect to keep the OCR unchanged through the end of the year".

A majority of FocusEconomics panellists expect the Reserve Bank of New Zealand to maintain the official cash rate stable this year, with an average forecast of 2.78%. For 2014, participants see interest rates ending the year at 3.63%.

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New Zealand Monetary Policy Chart

New Zealand Monetary Policy April 2013

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

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