New Zealand Monetary Policy

New Zealand

New Zealand: Central Bank leaves policy rate unchanged at final meeting of the year

December 8, 2011

At its 8 December monetary policy meeting, the final one this year, the Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) on hold at 2.50%, in a move widely expected by the market. The Bank's decision means that the main policy rate has now been unchanged for nine consecutive months. In its statement, RBNZ Governor Alan Bollard stated that ?as foreshadowed in the September Statement, global conditions have deteriorated.? Monetary authorities recognised that difficulties related to the Eurozone sovereign debt crisis have resulted in elevated levels of volatility in global financial markets and a softening in global economic growth. Officials pointed out that ?global developments are having some negative impact on New Zealand, though to date it has been limited?, as the economy continues to show modest growth. Moreover, monetary authorities stated that the current depreciation of the New Zealand dollar provides extra support to exporters and that inflation is expected to return within the Bank's 2.0% 1.0% target in the last quarter of the year. Consequently, given high uncertainty levels regarding current global conditions, the RBNZ defended the wisdom of its decision. The next monetary policy meeting is scheduled for 26 January of 2012.


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