Reserve Bank of New Zealand

November 9, 2017

CPI inflation is projected to remain near the midpoint of the target range, and longer-term inflation expectations are well anchored at 2 percent. Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.

So concludes a statement from Governor Spencer after the Official Cash Rate was left steady at 1.75%. The OCR was last cut exactly a year ago. In all there were three 25-basis point reductions in 2016 and four during the final seven months of 2015. Prior to June 2015, the OCR had been twice as high as now. One uncertainty is the recent election of a new Labour-led government. Another involves the uncertain outlook of the kiwi. RBNZ officials are happy about a recent depreciation of the kiwi, which “if sustained, will increase tradables inflation and promote more balanced growth.” Economic growth was better last quarter than in the first half of this year, and core inflation remains subdued.

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



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