New Zealand Central Bank Leaves Key Rate Unchanged
(RTTNews) - New Zealand central bank kept its key rate unchanged for the second straight meeting but policymakers turned more hawkish so as to bring inflation back to the target range.
The Monetary Policy Committee of the Reserve Bank of New Zealand governed by Adrian Orr, decided to leave the Official Cash Rate at 5.50 percent, as widely expected.
The central bank has lifted the OCR by a cumulative 525 basis points since October 2021.
Policymakers said the current level of interest rates is constraining spending and hence inflation pressures. The committee said interest rates need to stay at restrictive levels for the foreseeable future to ensure inflation returns to the 1 to 3 percent target range.
However, the MPC observed that there is a risk that activity and inflation measures do not slow as much as expected in the near-term.
Consumer price inflation eased to 6.0 percent in the June quarter. However, measures of core inflation remained near their recent highs.
The MPC expects inflation to decline within the target band by the second half of 2024. The committee agreed that the risks around the inflation projection remain balanced.
The minutes of today's meeting were unambiguously on the hawkish side, Capital Economics' economist Abhijit Surya said. The economist pushed back the forecast for rate cuts to the second quarter of 2024 from the first quarter estimated previously.
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