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Lee Sue Ann, Economist at UOB Group, assessed the recent steady/dovish stance from the RBNZ following yesterday’s monetary policy meeting.

Key Quotes

“As expected, the Reserve Bank of New Zealand (RBNZ) kept the Official Cash Rate (OCR) steady at 1.75%. The central bank has not adjusted the OCR since 2016, and earlier today in its accompanying press statement, maintained its view that the next move in the OCR could be up or down, but that monetary policy needed to remain supportive”.

RBNZ governor Adrian Orr said the outlook for the OCR assumed the pace of growth will pick up over the coming year, assisting inflation to return to the target mid-point of its 1 to 3 per cent annual range. He added that the RBNZ’s projection for the New Zealand economy, as detailed in the August Monetary Policy Statement, is little changed”.

“Whilst we previously predicted that the OCR would begin rising in the second half of 2019, we had revised our call following the last meeting in August where the RBNZ adopted a more dovish tone, now forecasting that the OCR will remain on hold until at least the end of 2019 before rising slowly thereafter”.