Reserve Bank of New Zealand Raises OCR

October 6, 2021

The Reserve Bank of New Zealand’s Official Cash Rate was doubled to 0.50% in the first increase since June 2014. A statement released by the Monetary Policy Committee there warns that “the economy contracted sharply during the recent nationwide health-related lockdown” but identifies “cause for concern in that inflation expectations appear to have begun rising again” and prioritizes that concern. Regarding growth, officials are counting on covid vaccinations, strong household and corporate balance sheets, a solid terms of trade and expansive fiscal support to deliver a decent economic recovery. The statement projects a further rise in rates, and it would take moves totaling 50 additional basis points to fully reverse the easing done in March 2020.

Copyright 2021, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

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