New Zealand Monetary Policy June 2018

New Zealand

New Zealand: RBNZ keeps key rate on hold in June

June 28, 2018

At its 28 June meeting, the Reserve Bank of New Zealand (RBNZ) met market analysts’ expectations and kept the Official Cash Rate (OCR) unchanged at a record-low 1.75%, where it has been since November 2016. This was the second monetary policy meeting incorporating the broadened mandate of supporting maximum sustainable employment and achieving price stability.

The RBNZ’s decision was taken against a backdrop of weaker-than-expected growth at the outset of the year, with the economy losing steam in Q1 from the previous quarter. The Bank also cited the escalation of global trade tensions and lowered its expectations of the stimulatory effect from the upcoming government spending push, suggesting a less bullish take on its economic outlook. On the price front, the RBNZ noted inflation remains low but is set to increase in the near term, largely due to external factors, namely higher oil prices. All in all, soft economic data and weak inflationary pressures likely served as the rationale behind the Bank’s decision.

Looking ahead, the RBNZ highlighted that the OCR is expected to remain low but gave no clear guidance of future policy moves, stressing only that it is “well positioned to manage change in either direction—up or down—as necessary”. Given the communique’s dovish tone, it is likely that monetary policy will remain accommodative for some time to come.

FocusEconomics panelists expect that the OCR will end 2018 at 1.75%. They see it increasing further and ending 2019 at 2.23%.


Author:, Economist

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New Zealand Monetary Policy Chart


NewZealand Monetary Policy June 2018

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


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