The Reserve Bank has decided to keep its official cash rate steady at 5.5 percent for the sixth consecutive meeting, citing ongoing efforts to rein in inflation. This decision comes despite expectations from economists that the benchmark rate would remain unchanged, consistent with the halt in rate increases implemented by the RBNZ since May of the previous year.
In its statement, the central bank noted that while inflation had moderated from its two-year low of 4.7 percent recorded at the end of the preceding year, both consumers and businesses continued to exercise caution in their spending habits. The Reserve Bank emphasized the necessity of maintaining high interest rates to address persistent inflationary pressures and to guide inflation back within its target range of 1-3 percent.
“The Monetary Policy Committee remains committed to a restrictive monetary policy stance to alleviate capacity pressures and manage inflation,” stated the central bank.
Despite acknowledging ongoing economic weakness, the Reserve Bank underscored the existence of near-term inflationary pressures. It expressed confidence that maintaining the OCR at a restrictive level over an extended period would facilitate a return of consumer price inflation to within the target range by the end of the current calendar year.
Looking ahead, the Reserve Bank’s indicative forecasts for the OCR, released in February, suggested little likelihood of a rate cut before mid-2025. This projection underscores the central bank’s commitment to a cautious approach in managing monetary policy to ensure sustained economic stability and control inflationary pressures.-TIN Bureau