Reserve Bank of New Zealand Retains Record Low 2.25% Cash Rate

June 9, 2016

At a second straight monetary policy meeting, New Zealand’s official cash rate was not changed.  Beginning at the year-earlier meeting in June 2015, five reductions were engineered by March 2016, and these more than reversed the four 25-basis point tightenings to 3.5% between March 2014 and July 2014.  A statement explaining today’s decision talks about a very weak global economy, persistent downside growth risks in spite of monetary stimulus in numerous countries, an overvalued New Zealand exchange rate that officials expect to depreciate in the future to more appropriate levels, low sub-target consumer price inflation inflation, somewhat worrisome house price inflation, and domestic demand that “continues to be supported by strong net immigration, construction, tourism and accommodative monetary policy.”

Copyright 2016, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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