MNI: RBNZ Leaves Key Rate On Hold; Next Move Up or Down: Text

     LONDON (MNI) - The Reserve Bank of New Zealand left the key cash rate

Unchanged at 1.75 following the Feb 13 meeting. However, they reinstated

guidance that the next move in rates could be either up or down, adding that

rates would likely remain unchanged throughout 2019 and 2020.

     The statement of Governor Adrian Orr's text follows:

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     Statement by Reserve Bank Governor Adrian Orr:

     Tena koutou katoa, welcome all.

     The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the

OCR at this level through 2019 and 2020. The direction of our next OCR move

could be up or down.

     Employment is near its maximum sustainable level. However, core consumer

price inflation remains below our 2 percent target mid-point, necessitating

continued supportive monetary policy.

     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.

Low interest rates, and continued employment growth, should support household

spending and business investment. Government spending on infrastructure and

housing also supports domestic demand.

     As capacity pressures build, consumer price inflation is expected to rise

to around the mid-point of our target range at 2 percent.

     There are upside and downside risks to this outlook. A more pronounced

global downturn could weigh on domestic demand, but inflation could rise faster

if firms pass on cost increases to prices to a greater extent.

     We will keep the OCR at an expansionary level for a considerable period to

contribute to maximising sustainable employment, and maintaining low and stable

inflation.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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