New Zealand Official Cash Rate Held Steady at 1.75%

March 22, 2017

As they decided at the first 2017 meeting held February 9, policymakers at the Reserve Bank of New Zealand agreed to keep their key interest rate at 1.75%, a record low reached after a 25-basis point cut last November. That was the seventh 25-basis point reduction since June 2015. The official cash rate had been previously at 3.50% since July 2014.

A statement under Governor Wheeler’s name implicitly conveys that the rate bias is still down.

  1. The stance is called accommodative and proclaimed likely to remain so “for a considerable period.”
  2. Despite a 4% trade-weighted kiwi depreciation since the previous meeting, the statement asserts that “further depreciation is needed to achieve more balanced growth.”
  3. Growth last quarter was weaker than expected, and housing prices have moderated. Inflation has only just returned to its 1-3% target band.
  4. The statement observes that numerous global uncertainties persist and ties that thought with forward guidance that “monetary policy may need to adjust accordingly.”

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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