New Zealand Monetary Policy

New Zealand

New Zealand: Central Bank leaves policy rate unchanged at record low

January 26, 2012

At its 26 January monetary policy meeting, the Reserve Bank of New Zealand (RBNZ) maintained the official cash rate (OCR) unaltered at 2.50%, in a move universally expected by market analysts. The Bank's decision marks the tenth consecutive month that the main policy rate has been unchanged. In its accompanying statement, Central Bank Governor Alan Bollard argued that ?world prices for New Zealand's export commodities have remained elevated but the recent appreciation of the New Zealand dollar is reducing exporters' returns?. In addition, monetary officials acknowledged that domestic demand has shown weak growth, with signs of only a subdued recovery in private consumption and the housing market. However, officials consider that inflationary pressures remain at bay, as inflation fell back below 2% in the fourth quarter 2011, and reckon that rebuilding in the Canterbury region will provide a significant boost to economic activity going forward. The RBNZ defended its stance on maintaining the OCR unchanged, citing the ongoing uncertainty regarding global conditions and the moderate pace of domestic demand. The next monetary policy meeting is scheduled for 8 March.

Author:, Senior Economist

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