Reserve Bank of New Zealand leaves its key OCR at 1% as was widely expected
Its forecasts for the OCR show they do not expect to cut this year at all
Summary of the major points, Headlines via Reuters
- sees official cash rate at 1.03% in March 2021 (previous 0.9%)
- sees official cash rate at 1.01% in June 2020 (previous 0.9%)
- at 1.1% in June 2021 (previous 0.94%)
Sees annual CPI 1.7% by March 2021 (previous 1.7%)
Says policy has time to adjust if needed
- overall impact of coronavirus on New Zealand will be of a short duration
- risks that impact will be larger and more persistent
- says low interest rates remain necessary
- says expects economic growth to accelerate over the H2 2020
Says employment is at or slightly above its max sustainable level
- says inflation close to 2% mid point
- says low rates necessary to keep employment and inflation around target
- says economic growth expected to accelerate over second half of 2020
RBNZ minutes:
- monetary policy committee noted that employment was at or slightly above its maximum sustainable level
- committee agreed low interest rates had helped to get employment and inflation to around their target levels
- committee discussed financial stability risks from ongoing low rates
- members noted the bank's assessment that marginal changes to the ocr would not materially affect these risks at this time
- members discussed the better mix of policy stimulus in the projections, given additional fiscal stimulus is reducing the burden on monetary policy
- committee discussed alternative cash rate settings and the various trade-offs involved
- committee agreed that ongoing low interest rates were needed to keep inflation and employment close to their mandated targets
A 'hawkish' statement from the RBNZ, or at least not too dovish. Note their projections for the cash rate ahead - no rate cu8ts on their horizon. This is supportive for the NZD.
