Reserve Bank of New Zealand Didn’t Cut Interest Rates Further

November 13, 2019

There’s already been one central bank surprise, this from the Reserve Bank of New Zealand. Officials there had been expected to extend their easing. New Zealand’s Official Cash Rate previously this year had been reduced by 25 basis points in May and 50 basis points to a mere 1.0% in August, but policymakers decided not to change their stance again just yet even while in a statement conceding that both domestic and external growth since their last policy change had continued to slow. The statement asserts that policy already is stimulative and maintains that recent economic developments do not warrant an additional rate cut, pointing out that robust prices for New Zealand’s export commodities and some depreciation of the New Zealand dollar have provided mitigating growth support. That said, the statement predicts a prolonged period of low interest rates, observes some slippage in medium-term inflation expectations, and promises to ease further if that’s deemed necessary. Prior to mid-2015, the OCR had been at 3.50%.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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