REPEAT:MNI RBNZ Says OCR Cld Go Up or Dn; Errs to Dovish Side

Repeats Story Initially Transmitted at 21:27 GMT Jun 27/17:27 EST Jun 27

--Leaves OCR Unchanged at 1.75%

By Sophia Rodrigues

     SYDNEY (MNI) - The Reserve Bank of New Zealand left the official cash rate

unchanged at 1.75% and left the key message that the rate could move up or down

intact but pointed to growing downside risks as flagged by MNI Insight published

Wednesday.

     Overall, the statement signals the risk is for a lower OCR. 

     "The Official Cash Rate (OCR) will remain at 1.75 percent for now. However,

we are well positioned to manage change in either direction - up or down - as

necessary," the RBNZ said Thursday.

     An important change was "for now" in the message. In May the RBNZ said,"The

Official Cash Rate (OCR) will remain at 1.75 percent for some time to come."

     The RBNZ said the outlook for the New Zealand economy as detailed in the

Monetary Policy Statement in May remain intact but pointed to downside risks

from global growth and inflation, and domestic growth.

     Outlook for global economic growth and inflation has been tempered slightly

by trade tensions in some major economies, the RBNZ said. "Ongoing volatility in

some emerging market economies continues," the RBNZ added.

     Domestically, the Q1 GDP implies marginally more spare capacity in the

economy than anticipated, the RBNZ said, adding that the government's projected

spending impulse is also slightly lower and later than anticipated.

     At the same time, the RBNZ was more optimistic about consumer price index

inflation rising in the near term due to higher fuel prices but didn't change

the outlook for a gradual rise to the 2% target beyond that.

     "The best contribution we can make to maximising sustainable employment,

and maintaining low and stable inflation, is to ensure the OCR is at an

expansionary level for a considerable period," the RBNZ said.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com