RBNZ says rate increases likely needed in 2014

Author: Adam Button | Category: News

Author: Adam Button

Highlights of the RBNZ decision:

  • Rate held at 2.50%, as expected
  • RBNZ expects to keep official cash rate unchanged to the end of the year
  • NZ dollar high
  • Rate hikes depend on housing and construction
  • Lending limits to help slow house inflation
  • Sustained strength in the exchange rate that leads to lower inflationary pressure would provide the Bank with greater flexibility as to the timing and magnitude of future increases in the OCR
  • Full statement from the RBNZ

NZD/USD jumped to 0.8270 from 0.8230 on the headlines. The ‘rate hike in 2014′ has been said before so any substantial follow through is unlikely.

“Although we expect to keep the OCR unchanged in 2013, OCR increases will likely be required next year. The extent and timing of the rise in the policy rate will depend largely on the degree to which the momentum in the housing market and construction sector spills over into broader demand and inflation pressures.”