New Zealand skyline

New Zealand Monetary Policy April 2023

New Zealand: RBNZ delivers larger-than-expected hike in April

At its 5 April meeting, the Reserve Bank of New Zealand (RBNZ) hiked the official cash rate (OCR) to 5.25% from 4.75%, marking the eleventh consecutive increase. The hike, which surprised markets on the upside, takes the OCR to its highest level since 2007.

The Bank’s decision came amid stubbornly high price pressures, above-target inflation expectations and a tight labor market. Moreover, a recent cyclone, Gabrielle, has disrupted production, translating into higher prices for some goods and services. The RBNZ raised rates in an effort to limit aggregate demand and thus cool price pressures. Meanwhile, the Bank expects faster-than-projected near-term inflation to add upside risk through higher inflation expectations.

Looking forward, the Bank said in a statement that “monetary conditions need to tighten further” in order to bring inflation within the 1.0–3.0% target band and stressed that “the direction of future monetary policy” would be determined by the extent of the decline in core inflation and inflation expectations.

Commenting on the release, Lee Sue Ann, economist at UOB, stated:

“At this juncture, given the huge amount of uncertainty and how little the RBNZ has given in terms of what to expect at the next monetary policy decision on 24 May, we are keeping our OCR forecast at 5.25% for the rest of this year.”

The next monetary policy meeting is scheduled for 24 May.

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest