OCR Unchanged, Hikes May Resume In 2022

The RBNZ left their monetary settings unchanged today, while noting that "on current projections the OCR eventually increases over the medium term," but "this is conditional on the economic outlook evolving broadly as anticipated". The reinstated OCR projection included in the Monetary Policy Statement suggested that the Reserve Bank expect the Overnight Cash Rate to rise from 2Q2022.

• The MPC dropped the line about being "prepared to lower the OCR if required" from the final paragraph of their announcement. There were no clear references to potential for further policy easing, but the summary record of the meeting noted that "the OCR is the preferred tool to respond to future economic developments in either direction".
• The MPC reiterated its pledge to maintain stimulatory monetary conditions "until it is confident that consumer price inflation will be sustained near the 2 percent per annum target midpoint, and that employment is at its maximum sustainable level." Worth flagging that previously the MPC referred to employment being "at or above its maximum sustainable level".
• On LSAP, the MPC acknowledged that "the LSAP programme could not reach the $100bn limit by June 2022," adding that the figure was a "limit, not a target." These were all knowns before the meeting.
• On the housing market, "the Committee acknowledged that some of the factors supporting house price growth have eased. In particular they noted the current high rate of housing construction, historically low population growth, increased loan-to-value ratio restrictions, and the Government's recent changes to housing tax and supply policies."