New Zealand Leaves Rate on Hold
The Reserve Bank of New Zealand left the official cash rate unchanged at 3.5 percent at its October meeting as widely expected, saying the economy is adjusting to previous monetary policy tightening.
Statement by Reserve Bank Governor Graeme Wheeler:
10/29/2014 8:08:57 PM
New Zealand Leaves Monetary Policy Unchanged
At its September meeting, Reserve Bank of New Zealand left the official cash rate unchanged at 3.5 percent, aiming to better assess the moderating effects of the recent policy tightening and export price reductions.
Published on 2014-09-10
New Zealand Raises Rate for 4th Straight Meeting
At its July meeting, Reserve Bank of New Zealand raised the official cash rate by 25 bps to 3.5 percent aiming to keep future inflation near the 2 percent target. The central bank increased the benchmark rate four times this year taking it up by 100 bps, but signalled the rate-hike campaign would pause to let the economy adjust to monetary policy tightening.
Published on 2014-07-24
The global economy is growing at a moderate rate although recent data suggests some softening in the major economies, apart from the United States. Monetary policy is expected to remain supportive for longer in all the major economies.
Growth in the New Zealand economy has been faster than trend over 2014, reducing unemployment and adding to demands on productive capacity. Strong construction sector activity, high net immigration, and interest rates, which remain low by historic standards, continue to support the expansion. Output growth is expected to moderate over coming years, towards a more sustainable rate.
Lower commodity prices and increased global financial market volatility have taken some pressure off the New Zealand dollar. However, its current level remains unjustified and unsustainable and continues to constrain growth in the tradables sector. We expect a further significant depreciation.
CPI inflation remains modest, and was 1 percent in the year to September. Contributing factors are subdued wage inflation, well-anchored inflation expectations, weak global inflation, falls in oil prices, and the high New Zealand dollar. House price inflation has fallen significantly since late-2013, in part due to interest rate increases and the LVR restrictions.
The economy appears to be adjusting to the policy measures undertaken by the Bank over the past year. CPI inflation is currently at a low level despite above-trend growth. However, inflation is expected to increase as the expansion continues. A period of assessment remains appropriate before considering further policy adjustment.