OCR likely to remain unchanged until next year

RBNZ's statement is "loud and clear," according to major bank

By Ksenia Stepanova

29 Jun 2018

The Official Cash Rate (OCR) has remained unchanged at 1.75%, though the Reserve Bank has stated that it is “well positioned to manage change in either direction – up or down – as necessary.”

The outlook for the New Zealand economy has not changed in any significant way since May, with employment at a sustainable level and price inflation remaining below the 2% mid-point of the Reserve Bank’s target.

The Reserve Bank acknowledged that global economic growth has been “tempered slightly by trade tensions in some major economies” and some volatility in emerging market economies will continue. Nonetheless, support for New Zealand’s products and services is expected to continue as normal.

According to Kiwibank, RBNZ’s statement was “loud and clear – until inflation is well on its way back to its 2% policy target midpoint, the OCR will remain unchanged at 1.75%.”

“With RBNZ’s decision and statement coming in as expected, there was little market reaction to the OCR review,” Kiwibank stated. “We maintain our view that RBNZ is at least a year away (August 2019) from contemplating OCR hikes.”