New Zealand Holds Rate Steady Unexpectedly
13 Novembre 2019 - 01:35AM
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New Zealand's central bank left the key interest rate unchanged
on Wednesday, defying expectations for a reduction, and signaled
that it was ready to add more stimulus if needed, in the backdrop
of subdued growth and below-target inflation.
The Monetary Policy Committee of the Reserve Bank of New
Zealand, led by Governor Adrian Orr, decided to keep the Official
Cash Rate, or OCR, at 1.0 percent. Economists had expected a
quarter-point reduction to 0.75 percent.
In the previous policy session in September, the bank left the
rate unchanged after slashing it by 50 basis points in August in a
surprise move. The bank lowered the rate twice this year. In May,
the rate was slashed by a quarter-basis points.
"We expect economic growth to remain subdued over the remainder
of the calendar year," Orr said in the policy statement.
"We will continue to monitor economic developments and remain
prepared to act as required."
Further, Orr said in the post-decision press conference that
rate-setters saw "no urgency to act" as the policy remained "very
stimulatory".
ING economist Robert Carnell said Orr's remarks sounded as if it
is the last cut in this series, which was "a little contrary to any
suggestion after the rate decision had been published, that the
RBNZ might try to talk the market back down."
"Although Orr did note that the RBNZ would add further stimulus
if needed, it is also apparent that he didn't think they would have
to," the economist added.
The bank slashed the quarterly growth forecast for the December
quarter to 0.6 percent from 0.7 percent seen in the August policy
statement. The full year growth outlook for this year was retained
at 2.7 percent, while the growth projection for 2020 was lowered to
2.1 percent from 2.4 percent.
The minutes of the latest policy meeting showed that MPC members
took note of the near-term downside risks to the economy.
"The Committee agreed that accommodative monetary policy remains
necessary to continue to meet their inflation and employment
objectives," the minutes said.
Policymakers anticipated a lift in economic growth during 2020
from the easing of monetary policy that has taken place since early
2019 and from stronger fiscal stimulus.
"The Committee agreed that the reduction in the OCR over the
past year was transmitting through the economy and that it would
take time to have its full effect," the minutes added.
Meanwhile, results of the RBNZ's quarterly survey of
expectations, released on Tuesday, showed that the two-year
inflation expectations dropped to 1.8 percent from 1.86 percent in
the September survey.
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