He The Reserve Bank of New Zealand (RBNZ) decided this Wednesday to keep its interest rates unchanged at 5.5% for the third consecutive meeting, as expected.
The entity last raised its rates last May, when it raised rates 25 basis points to the current 5.5%. Since then, in the July, August and October meetings, it has not changed its rates.
RBNZ statement
The Monetary Policy Committee agreed today to maintain the Official Cash Rate (OCR) at 5.50%
Interest rates are limiting economic activity and reducing inflationary pressure as needed.
Demand growth in the economy continues to decline. While GDP growth in the April-June quarter was stronger than expected, growth prospects remain moderate. As monetary conditions remain tight, spending growth is expected to slow further.
Globally, economic growth remains below trend and headline inflation has declined for most of our trading partners. Core inflation has also decreased, but to a lesser extent. Weakening global demand is putting downward pressure on New Zealand export volumes and prices. Aside from oil, global import prices have fallen.
While the supply-demand imbalance continues to moderate in the New Zealand economy, a prolonged period of moderate activity is required to reduce inflationary pressure.
There is a short-term risk that activity and inflation will not slow as much as would be necessary.. In the medium term, a further slowdown in global economic demand, particularly in China, could further impact New Zealand’s commodity prices and export earnings.
The Committee agreed that the OCR should remain at a restrictive level to ensure that annual consumer price inflation returns to the target range of 1 to 3% and to support maximum sustainable employment.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
