Reserve Bank of New Zealand Policy Still on Hold
March 7, 2012
In the wake of the South Island earthquake, New Zealand’s Official Cash Rate (OCR) was slashed by 50 basis points in March 2011 and returned to its all-time low of 2.5%, which had prevailed from end-April 2009 until a pair of 25-bp rate hikes in June and July of 2010. A statement just released after the second policy meeting of 2012 retained a 2.5% OCR as expected but depicted a brighter economic growth outlook. That said, New Zealand seems no closer to a tighter monetary policy. The statement
- Notes that inflation expectations have fallen, and actual inflation is in the middle of the target range.
- Calls financial market sentiment fragile and global growth risks persisting.
- Asserts that "sustained strength in the New Zealand dollar would reduce the need for future increases of the OCR."
New Zealand’s third scheduled interest rate announcement of 2012 is scheduled for April 26 locally (which translates to April 25 GMT and U.S. Eastern Daylight Time).
Copyright 2012, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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