The Reserve Bank of New Zealand left its key cash rate on hold at a record low 1.75 per cent at today’s board meeting.

Reserve Bank governor Adrian Orr said, “We expect to keep the OCR at this level through 2019 and into 2020.”

But the central bank again left the door open for an interest rate cut with its statement that the next OCR move could be up or down.

In May, the central bank said that the cash rate will remain at 1.75 per cent “for some time to come.” The rate has been on hold at 1.75 per cent since the end of 2016.

“There’s no rush to be moving,” Governor Orr said in August after the last decision “We’re comfortable where we are, We will do what central banks do best – watch, wait and worry,” he said.

Since the RBNZ last met in early August, we’ve learnt that New Zealand economic growth surged in the June quarter, lifting by 1%, the fastest increase in two years.

While GDP growth in the June quarter was stronger than we had anticipated, downside risks to the growth outlook remain.

Importantly, it was double the pace forecast by the RBNZ, but it wasn't enough to shift the dial on interest rates at this meeting.

Governor Orr said that the projection for the New Zealand economy, as detailed in the August Monetary Policy Statement, is little changed.  "While GDP growth in the June quarter was stronger than we had anticipated, downside risks to the growth outlook remain," he said.

"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."

Read the full statement here.

 



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Wednesday 5th December 2018
One Agency

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