New Zealand Monetary Policy Announcement

June 13, 2013

We expect to keep the OCR unchanged through the end of the year.

So concludes the latest statement on monetary policy from the Reserve Bank of New Zealand.  The Official Cash Rate has been at 2.5% since a 50-basis point cut in March 2011 that was implemented soon after a devastating earthquake on the South Island in the Canterbury region.  Today’s statement calls the kiwi still overvalued, expresses concern about the rate of house price inflation and the need to ensure that such does not compromise financial or price stability, but notes that fiscal consolidation and a mixed global outlook will exert a continuing drag on growth.  Private domestic demand will power an uneven recovery.  “Reflecting the balance of several forces, we expect annual GDP growth to accelerate to about 3.5 percent by the second half of 2014, and inflation to rise towards the midpoint of the 1 to 3 percent target band.”

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

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