New Zealand Monetary Policy April 2021

New Zealand

New Zealand: RBNZ keeps ultra-loose monetary stance unchanged in April

April 14, 2021

At its meeting on 14 April, the Reserve Bank of New Zealand (RBNZ) decided to hold the official cash rate (OCR) steady at its record low of 0.25%, and at the same time left the scale of its monetary stimulus program unchanged.

The economy swung back to contraction in Q4 2020 as border closures hit the tourism sector hard in the summer, and incoming data shows that economic conditions are still volatile due to the impact of Covid-19-related restrictions. Moreover, the economic outlook remains clouded by the uncertain evolution of the health crisis and its effects on consumer and business confidence. On the price front, although disruptions to global supply chains and higher oil prices are lifting near-term price pressures, the Bank considers prolonged monetary stimulus essential for inflation to move towards its 2.0% midpoint target.

Looking ahead, the Bank struck a fairly dovish tone, stating that it will maintain “its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained at the 2 percent per annum target midpoint, and that employment is at or above its maximum sustainable level”, adding that considerable time will be needed to meet these goals and that rate cuts may be warranted ahead.

The next monetary policy meeting is scheduled for 26 May.

FocusEconomics panelists project that the OCR will end 2021 at 0.01% and 2022 at 0.13%.


Author: Massimo Bassetti, Senior Economist

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New Zealand Monetary Policy Chart


New Zealand Monetary Policy April 2021

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


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