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The Reserve Bank of New Zealand monetary policy committee (MPC) unanimously voted to hold the official cash rate at 5.5% today, its fifth consecutive pause, while the updated Monetary Policy Statement adjusted the pace it expects inflation to fall and lowered its peak rate prediction.
The RBNZ now expects annual CPI to fall to 2.6% by the September 2024 quarter, down from the previous 2.9% forecast made in November. The Reserve targets inflation between 1-3%. The MPC's latest move was largely anticipated. (See MNI RBNZ WATCH: MPC To Consider Pause And Keep Hawkish Stance)
The Reserve also expects the OCR to peak at 5.6% in the June quarter, down from 5.7%. (See charts).
In its statement following the decision, the MPC noted the current level of the OCR is restricting demand. “However, a sustained decline in capacity pressures in the New Zealand economy is required to ensure that headline inflation returns to the 1 to 3 percent target.”
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.