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
Celebration is the name of the game for property investors nationwide after the Government announced that it won’t be introducing a capital gains tax.
Auckland’s price growth might be flatlining overall but new data shows the SuperCity still has some hot spots where prices are on the rise.
Technology and changes to the way people work are set to transform the commercial property sector and investors need to be attuned to these developments.
The demise of the capital gains tax proposal and record low mortgage rates will led to a pick-up in housing demand and boost the market, ASB economists say.