New Zealand Monetary Policy November 2021

New Zealand

New Zealand: RBNZ tightens its stance again in November

November 24, 2021

At its 24 November meeting, the Reserve Bank of New Zealand (RBNZ) decided to hike the official cash rate to 0.75% from 0.50%, marking the second consecutive increase. The move was widely expected by market analysts. The Bank’s decision was aimed at reining in mounting inflationary pressures and surging house prices. Moreover, employment is now above its maximum sustainable level and the economy is seemingly expanding above its growth potential, which gave the Bank further cause to reduce its stimulus. Additionally, as domestic vaccination rates rise and restrictions are eased, activity looks set to grow robustly ahead.

Looking forward, the Bank hinted at further tightening, stating that the “further removal of monetary policy stimulus is expected”. It projects inflation to climb above 5.0% in the near term amid higher oil prices, rising transport costs and the impact of supply shortfalls, and then return towards the 2.0% midpoint of the target band over the next two years.

Commenting on the Bank’s decision, as well as the outlook for monetary policy, Lee Sue Ann, economist at United Overseas Bank, said:

“Today’s hike of 25bps reinforces our view that any further tightening is likely to occur in a steady approach, with incoming data key to determining future moves. For now, we are comfortable with our call for follow-up 25bps hikes in February, May, August and November, taking the OCR to 1.25% by mid-2022, and for it to reach 1.75% by end-2022.”

FocusEconomics panelists are still assessing the latest developments and new forecasts will be released in our next publication on 16 December.


Author: Massimo Bassetti, Senior Economist

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New Zealand Monetary Policy Chart


New Zealand Monetary Policy November 2021

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


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