First OCR decision of the year: Unchanged

Wednesday 13 February 2019

The Official Cash rate is unchanged and isn't likely to move anytime soon. When it does it could go either way. Here's what RBNZ Governor Adrian Orr said today.

The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the OCR at this level through 2019 and 2020. The direction of our next OCR move could be up or down.

Employment is near its maximum sustainable level. However, core consumer price inflation remains below our 2 percent target mid-point, necessitating continued supportive monetary policy.

Trading-partner growth is expected to further moderate in 2019 and global commodity prices have already softened, reducing the tailwind that New Zealand economic activity has benefited from. The risk of a sharper downturn in trading-partner growth has also heightened over recent months.

Despite the weaker global impetus, we expect low interest rates and government spending to support a pick-up in New Zealand’s GDP growth over 2019. Low interest rates, and continued employment growth, should support household spending and business investment. Government spending on infrastructure and housing also supports domestic demand.

As capacity pressures build, consumer price inflation is expected to rise to around the mid-point of our target range at 2 percent.

There are upside and downside risks to this outlook. A more pronounced global downturn could weigh on domestic demand, but inflation could rise faster if firms pass on cost increases to prices to a greater extent.

We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.

Comments from our readers

No comments yet

Sign In / Register to add your comment

Property News

Auckland sees highest sales since 2015

The SuperCity turned in its strongest housing sales performance in a July for five years last month, new data from Auckland’s biggest real estate agency reveals.

House Prices

Is the market resurgence coming to an end?

Steady declines in value growth are becoming evident – as QV’s latest data reveals – and that suggests the housing market’s resurgence could be coming to an end.

Commercial

Augusta Capital takeover bid now unconditional

ASX-listed Centuria Capital has declared that its takeover of New Zealand property funds manager Augusta Capital is now unconditional, as it has secured nearly 66% of Augusta’s shares.

Mortgages

ANZ eases servicing test

ANZ has become the latest bank to ease its servicing test criteria for borrowers, reflecting the lower interest rate environment.

Site by PHP Developer