Researchers at UOB Group assessed the recent RBNZ meeting.
Key Quotes
“As widely expected, the Reserve Bank of New Zealand (RBNZ) maintained the Official Cash Rate (OCR) at 1.75%. The central bank has not adjusted the OCR since 2016, and has been forecasting no changes until late next year. Whilst little changed from May, today’s accompanying press statement was viewed as slightly more “dovish”.
“RBNZ governor Adrian Orr said ongoing spending and investment, by both households and government, is expected to support the economy. However, recent weaker-than-expected growth “implies marginally more spare capacity in the economy than we anticipated”.
“According to Orr, inflation is likely to increase in the near term due to higher fuel prices. Beyond that, it is expected to gradually rise to the 2% annual target, resulting from capacity pressures”.
“Overall, we continue to think the next move by the RBNZ will be a hike, but we are only anticipating the first rate rise, at the earliest, in the second half of 2019″.
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