New Zealand holds rates, sees no movement until 2021

Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington September 25, 2017. — Reuters pic
Pedestrians walk near the main entrance to the Reserve Bank of New Zealand located in central Wellington September 25, 2017. — Reuters pic

WELLINGTON, Feb 13 — New Zealand’s central bank said today its interest rate freeze was likely to continue for another two years amid persistent low inflation and a healthy growth outlook.

The official cash rate (OCR) has been unchanged at 1.75 per cent since November 2016 as the Reserve Bank of New Zealand takes a hands-off approach to maintaining economic growth.

“We expect to keep the OCR at this level through 2019 and 2020. The direction of our next OCR move could be up or down,” Governor Adrian Orr said today.

While the economy is expected to grow at about 3.0 per cent this year, Orr said inflation remained at the lower end of the bank’s 1.0-3.0 target band.

“Employment is near its maximum sustainable level. However, core consumer price inflation remains below our 2.0 per cent target mid-point, necessitating continued supportive monetary policy,” he said.

Orr added: “We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.” — AFP

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