RBNZ Leaves OCR at 1.75%
The New Zealand regulator did not make any changes to its monetary policy, as expected, leaving the official cash rate at 1.75%. However, the overall tone remains neutral, and the rate hike is not expected until the second half of 2019.
As for the national currency, the RBNZ stated that its current dynamics is quite comfortable, but if it starts to grow, the central bank may change its rhetoric. RBNZ also said that while it is too early to talk about a possible tightening of monetary policy, which had a negative impact on the dynamics of the New Zealand dollar.
The central bank also adjusted GDP growth forecasts. It is expected, that economic growth will reach 3.2% in 2018, which is 0.6 percentage points higher than the previous estimate. The central bank of New Zealand also revised the inflation forecast from 2% to 1.5% in 2018, from 2% to 1.8% in 2019. The accompanying statement of the RBNZ says that GDP growth will accelerate against a backdrop of low interest rates. The Central Bank also noted that inflation forecasts will increase, and long-term expectations for annual inflation are fixed at 2%.