New Zealand Official Cash Rate Left at 2.5%

April 23, 2013

It’s been more than two years since the last New Zealand central bank interest rate change, a 50-basis point cut in March 2011.  Today’s policy statement

  • Retains the previous monetary policy outlook, namely that the Official Cash Rate will likely stay at 2.5% through end-2013.
  • Expresses balanced concerns, first that the housing market is too heated and could compromise financial or price stability but, second, that the New Zealand dollar is overvalued and stronger than had been assumed in the prior policy review in March.
  • Observes that New Zealand growth has picked up and projects that CPI inflation will remain close to the target range floor in 2013 of 1.0%.  The target ceiling is 3.0%.

The revised outlook that was unveiled in March revised projected 2013 GDP growth to 2-3% from 2.5-3.5%.  The next OCR announcement by the Reserve Bank of New Zealand on June 13 will include a broader monetary policy statement.

Copyright 2013, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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