New Zealand’s central bank left its benchmark Official Cash Rate (OCR) steady at 1.75 percent, as expected, and reiterated its recent guidance that “monetary policy will remain accommodative for a considerable period” as its policy may need to adjust to the many uncertainties.
The Reserve Bank of New Zealand (RBNZ) also maintained its forecast for the first interest rate hike to come in September 2019 when the OCR rate is seen rising to 1.9 percent from 1.8 percent. The second rate hike is seen coming in March 2020 when OCR rises to 2.0 percent.
In its latest monetary policy statement, the RBNZ forecast the OCR rate would then rise further to 2.1 percent by September 2020.
The forecast for inflation this year was lowered to reflect the waning impact of higher fuel and food prices, with the RBNZ saying headline inflation should rise gradually as capacity pressures rise, pushing inflation back to the midpoint of its target range.
After easing to 1.3 percent by December this year, New Zealand’s inflation rate is seen remaining low in early 2018, hitting 0.7 percent by March next year, before slowly rising to 2.0 percent by March 2019.
New Zealand’s inflation rate eased to a lower-than-expected 1.7 percent in the second quarter of this year from 2.2 percent in the first quarter, well within the central bank’s target band of 1 -3 percent.
New Zealand holds rate, still sees 1st hike in Sept 2019