Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


RBNZ MPS: Overview and policy assessment

Overview and policy assessment

The Reserve Bank has decided to leave the Official Cash Rate unchanged at 5.75 per cent

Since our May Statement, prospects for the international economy have become increasingly clouded, with sharp falls in equity markets and heightened investor nervousness in the US and elsewhere. Although the New Zealand economy has performed well over the past year, the odds of an international slowdown have increased, which would have adverse consequences for the performance of the New Zealand economy.

This renewed global uncertainty occurs at a time when the outlook for inflation has been of concern. Indicators of core inflation have edged up to around 3 per cent following a sustained period of higher-than-average pressure on the country's productive resources.

Gauging the extent to which the path for inflation will be affected by recent global developments is no easy task. Quite plausibly, the impact of recent global developments will remove much of the existing upwards pressure on inflation. But, conversely, the economy may continue to grow at a pace that maintains pressure on resources. Indeed, some of the recent drivers of strong domestic economic activity, including the sharp turnaround in net immigration, may not dissipate rapidly even in the event of softer international conditions.

Monetary policy involves carefully weighing the competing risks. On balance, we feel that current global developments, recent falls in export prices, an exchange rate higher than on average last year, and the lagged effects of the interest rate increases earlier this year are likely to dampen inflation pressures sufficiently going forward. In May it looked likely that further increases in interest rates would be required over the coming year to keep inflation within the target band, but that prospect now looks less likely. That was also the judgement we were coming to at our last OCR review in July, albeit for somewhat different reasons.

"We will continue to monitor global markets and the local economy, and assess the inflation outlook. For now, the prudent response is to pause, and to watch and wait.

Rod Carr
Acting Governor

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news