News

What the RBNZ said: Monetary tightening brought forward

The Reserve Bank hikes the OCR 50 basis points to 1.50%

Wednesday, April 13th 2022

The Monetary Policy Committee today increased the Official Cash rate (OCR) to 1.50 percent. The Committee agreed it is appropriate to continue to tighten monetary conditions at pace to best maintain price stability and support maximum sustainable employment.

The Committee remained comfortable with the outlook for the OCR as outlined in their February Monetary Policy Statement. They agreed that moving the OCR to a more neutral stance sooner will reduce the risks of rising inflation expectations. A larger move now also provides more policy flexibility ahead in light of the highly uncertain global economic environment.

The level of global economic activity continues to generate rising inflation pressures, exacerbated by ongoing supply disruptions in large part driven by Covid-19. The Russian invasion of Ukraine has significantly added to these supply disruptions, causing prices to spike in internationally traded commodities and energy. 

However, the pace of global economic activity continues to slow. There is an elevated level of uncertainty created by the persistent impacts of Covid-19, and clear signals that monetary and broader financial conditions will tighten over the course of 2022. Added to this is the high level of geopolitical tension and related economic sanctions on Russia.

In New Zealand, underlying strength remains in the economy, supported by sound balance sheets, continued fiscal support, and strong export earnings. There has been some economic disruption due to the outbreak of Omicron. However, the high vaccination rates across New Zealand are assisting to reduce this disruption.

Heightened global economic uncertainty and inflation are dampening consumer confidence. The rise in mortgage interest rates – amongst other factors – have acted to reduce mortgage demand and house prices. However, economic capacity pressures remain, with a broad range of indicators highlighting domestic capacity constraints and ongoing inflation pressures. Employment is above its maximum sustainable level and labour shortages are impacting many businesses.

The Reserve Bank’s core inflation measures are at or above 3 percent. Inflationary pressure is being further accentuated by current high imported energy and commodity prices, which are lifting headline CPI inflation. The Committee will remain focused on ensuring that current high consumer price inflation does not become embedded into longer-term inflation expectations.

Comments

No comments yet

Select Home Loans 4.29
HSBC Premier 4.39
ICBC 4.39
Heartland Bank - Online 4.40
China Construction Bank Special 4.45
SBS Bank Special 4.55
Kainga Ora 4.57
Co-operative Bank - First Home Special 4.75
TSB Special 4.85
AIA 4.85
Co-operative Bank - Owner Occ 4.85
Select Home Loans 4.86
Heartland Bank - Online 4.90
TSB Special 4.99
ICBC 5.09
HSBC Premier 5.15
SBS Bank Special 5.19
China Construction Bank Special 5.19
AIA 5.35
Co-operative Bank - Owner Occ 5.35
First Credit Union Special 5.45
Unity 5.55
Select Home Loans 5.20
HSBC Premier 5.89
ICBC 5.89
SBS Bank Special 5.95
TSB Special 5.99
BNZ - Classic 6.19
Kiwibank Special 6.29
Resimac 6.33
China Construction Bank Special 6.35
Westpac Special 6.39
Kainga Ora 6.43
Select Home Loans 4.09
Heartland Bank - Online 4.10
Pepper Money 4.49
Liberty 4.84
TSB Special 4.89
Kiwibank Special 5.00
ICBC 5.25
Kainga Ora 5.43
Kiwibank 5.50
China Construction Bank 5.50
Kiwibank - Offset 5.50

More Stories

Phenix Salon Suites brings lucrative property management franchise opportunity to NZ

Monday, June 27th 2022

Phenix Salon Suites brings lucrative property management franchise opportunity to NZ

Fast-growing US property management franchise, Phenix Salon Suites, is looking to expand its global footprint into the New Zealand market.

Patchy housing market shows widespread falls as well as some increases

Thursday, June 23rd 2022

Patchy housing market shows widespread falls as well as some increases

Despite the widespread fall in house prices across the country, some suburbs are bucking the trend and rising.

Banks switch focus to refinancing

Wednesday, June 22nd 2022

Banks switch focus to refinancing

Banks are moving into offering incentives for investors and homeowners to switch when refinancing their mortgages as property sales plummet.

Questions over new office construction

Tuesday, June 21st 2022

Questions over new office construction

New build office development activity is ramping up in Auckland, Wellington and Christchurch, but is now the best time to proceed?