New Zealand Monetary Policy February 2019

New Zealand

New Zealand: RBNZ leaves OCR unchanged in February

February 13, 2019

At its first meeting of the year, held on 13 February, the Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record-low of 1.75%, where it has been since November 2016. The decision was widely in line with analysts’ expectations and marked the sixth monetary policy meeting incorporating the broadened mandate of both supporting maximum sustainable employment and achieving price stability.

The RBNZ remarked that low underlying inflation and a tight labor market signaled that businesses have not yet passed on cost increases to consumers and also noted that the recent minimum wage hike is likely to add further pressure on firms. An accommodative OCR is therefore key to pushing core inflation towards the 2.0% target and ease the cost burden on business. In turn, employment should remain near the maximum sustainable level.

On its forward-looking guidance, the RBNZ maintained a dovish tone, prioritizing a pick-up in economic activity and further labor market tightening, and expects the OCR to remain unchanged through 2019 and 2020. The Bank, however, did add that the “next OCR move could be up or down”, as a volatile international backdrop could weigh on the outlook.

The next monetary policy meeting is scheduled for 27 March.

FocusEconomics panelists expect that the OCR will end 2019 at 1.83%. They see it increasing the following year and ending 2020 at 2.13%.


Author:, Economist

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New Zealand Monetary Policy Chart


NewZealand Monetary Policy February 2019

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


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