New Zealand skyline

New Zealand Monetary Policy June 2018

New Zealand: RBNZ keeps key rate on hold in June

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.

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