New Zealand: RBNZ stands pat in November
At its 29 November meeting, the Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at 5.50%.
The Bank decided to stand pat as it estimated that previous monetary policy tightening was already cooling demand dynamics and, therefore, inflationary pressures. That said, the RBNZ warned that “inflation remains too high, and the Committee remains wary of ongoing inflationary pressures”.
Looking forward, the Bank stated that “OCR will need to stay restrictive, so demand growth remains subdued, and inflation returns to the 1 to 3 percent target range”. The vast majority of our panelists expect rate cuts for next year, as inflation moderates further from current levels.
The next monetary policy meeting is scheduled for 28 February.
Commenting on the outlook, Lee Sue Ann, economist at UOB, stated:
“Tighter fiscal policy will further weigh on growth, though most fiscal measures will likely be announced only during the May 2024 budget, and implementation likely to take some time. Nonetheless, we think the RBNZ will have to cut rates sooner than its own projections imply”.