MNI BRIEF: RBNZ MPC Holds OCR At 5.5%

The Reserve Bank of New Zealand monetary policy committee held the Official Cash Rate steady at 5.5% Tuesday, lifting its end of year CPI projection 40 basis points to 2.9% and its OCR outlook 10bp to 5.7% by December.

In a statement, the MPC said its current stance is sufficient to bring inflation back to its 1-3% target.

“In the context of persistent domestic inflation, weaker productivity growth, and uncertainty regarding the pace of normalisation in wage and price-setting behaviour, the Committee discussed the possibility of increasing the OCR at this meeting," the MPC noted. "The Committee assessed that, while the near-term balance of risks around inflation are skewed to the upside, there is more confidence that inflation will decline to within the target range over the medium term. However, the Committee also agreed that interest rates may have to remain at a restrictive level for longer than anticipated in the February Monetary Policy Statement to ensure the inflation target is met.”

The committee voted unanimously to hold the OCR steady.

Governor Orr will hold a press conference at 3pm NZST to further detail the decision and updated forecasts.