Money in New Zealand
New Zealand - Money
RBNZ cuts the policy rate by 50 basis points to an all-time low in surprise move
On 7 August, the Reserve Bank of New Zealand (RBNZ) surprised market analysts by slashing the official cash rate (OCR) by 50 basis points to an all-time low of 1.00%. The move caused the New Zealand dollar to plunge sharply, as the market had priced in a 25-basis-point reduction. The Bank also indicated the possibility of taking more radical action ahead amid weak demand conditions and a subdued inflationary environment.
Below-target inflation, persistent weakness in the housing market, and rising headwinds to growth amid an increasingly tense global trade backdrop prompted the Bank to cut rates more than had been expected. The Bank noted that, in the absence of additional monetary stimulus, employment and inflation would likely soften relative to its targets, expressing increased concerns over the impact of cooling global economic activity on New Zealand’s export performance, investment and overall growth. In a press conference following the meeting, RBNZ Governor Adrian Orr even entertained the prospect of taking rates below zero, with the balance of risks to achieving the inflation and employment targets tilted to the downside.
In its forward-looking guidance, the RBNZ signaled the possibility of further cuts. Fears over the fallout of the intensifying U.S.–China trade dispute, cooling global growth and the dovish stance of major central banks could prompt the RBNZ to continue loosening its stance at its next meeting.
The next monetary policy meeting is scheduled for 25 September.
FocusEconomics panelists are still taking the recent rate cut into account.
New Zealand - Money Data
| 2013 | 2014 | 2015 | 2016 | 2017 | |
|---|---|---|---|---|---|
| Money (annual variation in %) | 15.6 | 10.3 | 14.2 | 2.1 | - |
New Zealand Money Chart
Source: Reserve Bank of New Zealand and FocusEconomics calculations.
New Zealand Facts
| Value | Change | Date | |
|---|---|---|---|
| Bond Yield | 1.47 | 1.20 % | Jul 31 |
| Exchange Rate | 0.66 | -1.69 % | Jul 31 |
| Stock Market | 4,733 | 0.11 % | Jul 31 |
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Economic News
New Zealand: RBNZ cuts the policy rate by 50 basis points to an all-time low in surprise move
August 7, 2019
On 7 August, the Reserve Bank of New Zealand (RBNZ) surprised market analysts by slashing the official cash rate (OCR) by 50 basis points to an all-time low of 1.00%.
New Zealand: Unemployment rate slides again in Q2
August 6, 2019
The seasonally-adjusted unemployment rate fell to 3.9% in Q2, down from 4.2% in Q1.
New Zealand: Consumer confidence at nine-month low in July
August 2, 2019
The ANZ-Roy Morgan consumer confidence indicator dropped to 116.4 in July (June: 122.6), moving closer to the 100-point threshold that separates optimism from pessimism among consumers. Consumers were less optimistic about their current financial situation, and they also grew less confident about their future financial conditions.
New Zealand: Business confidence moves further into pessimistic territory in July
July 31, 2019
The ANZ bank business outlook indicator fell by 6.2 points in July, with a net 44.3% of firms reporting that they expect general business conditions to deteriorate this year.
New Zealand: Inflation accelerates on higher fuel and housing costs in Q2
July 16, 2019
Consumer prices increased 0.6% in Q2 2019 over the previous quarter, up notably from Q1 0.1% uptick, according to Statistics New Zealand.
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