"The economic outlook ahead remains highly uncertain"
The Reserve Bank of New Zealand has kept the Official Cash Rate (OCR) unchanged at 0.25%, and has maintained its Large Scale Asset Purchase (LSAP) programme at a cap of $100 billion.
The decision is in line with economist expectations, who do not expect to see a change in the OCR this year.
The Reserve Bank’s Monetary Policy Statement maintained a ‘cautiously optimistic’ tone, noting that global COVID-19 vaccination programmes would have a positive impact on economic activity - however, it noted that there will be a ‘significant period’ before widespread immunity can be achieved.
“In the meantime, economic uncertainty will remain heightened as international border restrictions continue,” the Reserve Bank stated.
“Economic activity in New Zealand picked up over recent months, in line with the easing of health-related social restrictions. Households and businesses also benefitted from significant fiscal and monetary policy support, bolstering their cash-flow and spending.”
“The economic outlook ahead remains highly uncertain, determined in large part by any future health-related social restrictions,” it added.
“This ongoing uncertainty is expected to constrain business investment and household spending growth.”
The MPS Committee will maintain its current settings until it is confident that consumer price inflation can be maintained at 2%, but says it will provide additional stimulus - including a negative OCR - if necessary.
The next OCR decision is expected in April.
