WELLINGTON: New Zealand’s central bank put its latest round of interest rate cuts on hold on Thursday, leaving the official cash rate (OCR) at 2.75 per cent as it assesses the impact of recent easing. In a widely expected move, the Reserve Bank of New Zealand adopted a “wait and see” stance after three successive rate cuts of 0.25 per cent, but foreshadowed further reductions.
“It is appropriate at present to watch and wait,” Reserve Bank governor Graeme Wheeler said in a statement, adding: “To ensure that future average CPI inflation settles near the middle of the target range, some further reduction in the OCR seems likely.” New Zealand’s annual inflation rate is currently 0.4 per cent, well below the bank’s target band of 1.0-3.0 per cent, which it said should be reached in early 2016.
The bank is attempting to strike a monetary policy balance that encourages growth without pushing up the New Zealand dollar or fuelling a housing boom in Auckland. Growth in the farm-based economy has slowed to about 2.5 per cent due to falling agricultural commodity prices and the bank has eased rates in recent months to help stimulate demand.
