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The Reserve Bank of New Zealand (RBNZ) matched broad consensus by leaving the official cash rate (OCR) unchanged at 1.75%. The New Zealand central bank expects to keep the OCR at this level through 2019 and 2020 with no strong signals on its next moves.

  • Employment is near its maximum sustainable level.  
  • Trading-partner growth is expected to further moderate in 2019 and global commodity prices have already softened, reducing the tailwind that New Zealand economic activity has benefited from.  
  • The risk of a sharper downturn in trading-partner growth has also heightened over recent months.
  • Despite the weaker global impetus, we expect low interest rates and government spending to support a pick-up in New Zealand’s GDP growth over 2019.
  • Keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.