OCR decision revealed
Wednesday 12 February 2020
The Reserve Bank of New Zealand has kept the official cash rate on hold. Here's what the central bank said:
The Monetary Policy Committee has decided to keep the official cash rate (OCR) at 1.0%.
Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2% mid-point of our target range. Low interest rates remain necessary to keep employment and inflation around target.
Economic growth is expected to accelerate over the second half of 2020 driven by monetary and fiscal stimulus, and the high terms of trade. The outlook for government investment is stronger following the Government’s announcements in December. There are also indications household spending growth will increase.
However, soft momentum in economic growth has continued into early 2020. Slower global growth over 2019 acted as a headwind to domestic growth. In addition, competitive pressures and recent subdued business confidence have suppressed business investment.
The global economic environment has shown signs of stabilising and trade tensions have receded somewhat. However, the Covid-19 (coronavirus) outbreak is an emerging downside risk.
We assume the overall economic impact of the coronavirus outbreak in New Zealand will be of a short duration, with most of the impacts in the first half of 2020. Nevertheless, some sectors are being significantly affected. There is a risk that the impact will be larger and more persistent. Monetary policy has time to adjust if needed as more information becomes available.
Comments from our readers
No comments yet
Sign In / Register to add your comment
Property News
Supreme Court dismisses price-fixing appeal
Two Hamilton real estate agencies have lost their long-running battle with the Commerce Commission over allegations of price-fixing.
House Prices
What lies ahead for the housing market
As New Zealand begins to settle into the “new normal” of the Covid-19 lockdown, commentators have started releasing their (tentative) outlooks for the housing market. Here’s a summary of some of them...
Commercial
Commercial sector facing hundreds of millions in lost revenue
Some large commercial tenants are refusing to pay rent and this could devastate the commercial property sector, the Property Council New Zealand is warning.
Mortgages
Banks roll out mortgage holiday
Major lenders have launched mortgage holidays for borrowers affected by the Covid-19 outbreak, using online application forms to process customer requests.
