OCR decision revealed
Wednesday 7 August 2019
The Reserve Bank of New Zealand has cut the Official Cash Rate to a new record low of 1%. Here's why:
The Reserve Bank said:
The Official Cash Rate (OCR) is reduced to 1.0 percent. The Monetary Policy Committee agreed that a lower OCR is necessary to continue to meet its employment and inflation objectives.
Employment is around its maximum sustainable level, while inflation remains within our target range but below the 2 percent mid-point. Recent data recording improved employment and wage growth is welcome.
GDP growth has slowed over the past year and growth headwinds are rising. In the absence of additional monetary stimulus, employment and inflation would likely ease relative to our targets.
Global economic activity continues to weaken, easing demand for New Zealand’s goods and services. Heightened uncertainty and declining international trade have contributed to lower trading-partner growth. Central banks are easing monetary policy to support their economies. Global long-term interest rates have declined to historically low levels, consistent with low expected inflation and growth rates into the future.
In New Zealand, low interest rates and increased government spending will support a pick-up in demand over the coming year. Business investment is expected to rise given low interest rates and some ongoing capacity constraints. Increased construction activity also contributes to the pick-up in demand.
Our actions today demonstrate our ongoing commitment to ensure inflation increases to the mid-point of the target range, and employment remains around its maximum sustainable level.
Comments from our readers
No comments yet
Sign In / Register to add your comment
Property News
Development focus for new Hamilton-Auckland partnership
Investors looking for future growth hotspots should keep an eye on the “Hamilton-Auckland Corridor” after New Zealand’s first urban growth partnership was signed on Thursday.
House Prices
Pushing up the national average price
The main centres used to drive New Zealand’s market but it was strong provincial markets that contributed to the national average asking price’s rise in July.
Commercial
Join the office space revolution
Flexible working spaces are more than just a fleeting trend and the launch of a new co-working serviced office franchise programme will open up the market to investors.
Mortgages
OCR cut could prompt housing market upturn
The Reserve Bank’s decision to slash the Official Cash Rate (OCR) by 0.5% to a historic low of 1.0% has shocked the financial community, but what could it mean for the housing market?
