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

 


NZ central bank tipped to keep rates on hold

Monday 20 March 2017 03:50 PM

NZ central bank tipped to keep rates on hold, maintain neutral bias: poll

By Rebecca Howard

March 20 (BusinessDesk) - The Reserve Bank of New Zealand is widely expected to keep interest rates on hold at a record low 1.75 percent on Thursday and to reiterate the risks are finely balanced.

All 11 economists polled by BusinessDesk expect rates to remain on hold with the median showing no chance of a rate hike or cut. The odds of governor Graeme Wheeler lifting the rate this week is also zero, according to the overnight interest swap curve.

In February, the central bank kept interest rates on hold and signalled that a rate increase wouldn't be on the cards until mid-2019. In a subsequent speech, Wheeler said the bank sees the risks evenly balanced in respect to the official cash rate, which could go either up or down, depending on whether there was an unexpected shock. Thursday's statement is expected to reiterate that view.

"We expect the bank to reiterate concluding comments in their February 2017 monetary policy statement that 'monetary policy will remain accommodative for a considerable period'," said First NZ Capital's director, economics and strategy Chris Green.

Economists are still widely tipping the bank to remain on hold for some time although several expect a rate hike as early as May 2018 given recent signs of inflation.

In the short-term, however, "we expect the RBNZ to maintain a very neutral tone at this week’s OCR Review, reinforcing our view that significant global uncertainties and independent changes to retail interest rates buy it time amidst a rising inflation profile," said ANZ Bank New Zealand chief economist Cameron Bagrie.

Last week's weaker-than-expected gross domestic product data served to reinforce this view. Westpac Banking Corp noted while near-term inflation is looking a bit stronger, growth in activity has fallen short of the RBNZ’s very optimistic forecasts and the "risk is that the economy simply may not have enough puff to generate the sustained lift in inflation pressures that the RBNZ is looking for."

The economy expanded 0.4 percent in the December quarter, less than half the 1 percent gain that the central bank forecast in February.

Kiwibank chief economist Zoe Wallis pointed to several "surprising developments" since the central bank's February rate decision, including a fall in GDP growth, a lower currency, a drop in global oil prices and price indicators suggesting a jump in near-term inflation. "The sum total of these events suggests that risks to future inflation remain fairly balanced and the RBNZ is likely to keep the current level of policy stimulus for some time," she said. Wallis doesn't expect any action from the central bank until 2019.

(BusinessDesk)

ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Errors Found: Electricity Authority Dumps Transmission Pricing Modelling

The Electricity Authority is ditching the cost-benefit analysis at the heart of its controversial attempt to find a new way to divide up costs for the national grid after finding an expanding range of serious computational errors in the work by Australian consultancy Oakley Greenwood. More>>

ALSO:

New Record: Migrant Arrivals At 129,500 A Year

Annual net migration has been steadily increasing since 2012. "This was mainly due to the rising number of migrant arrivals to New Zealand," population statistics senior manager Peter Dolan said. "Fewer migrant departures also contributed to the increase in net migration." More>>

ALSO:

Launched: NASA's Super Pressure Balloon Takes Flight From NZ

NASA successfully launched its football-stadium-sized, heavy-lift super pressure balloon (SPB) from Wanaka, New Zealand, at10:50 a.m. Tuesday, April 25 (6:50 p.m. April 24 in U.S. Eastern Time), on a mission designed to run 100 or more days floating at 110,000 feet (33.5 km) about the globe in the southern hemisphere's mid-latitude band. More>>

ALSO:

Trade Agreements: TPP Minus US Starting To Gain Ground

The Japanese government is picking up the pace on reviving the Trans-Pacific Partnership trade and investment deal, with talks scheduled next month among the 11 countries left in the pact after the withdrawal by the US after the election of president Donald Trump. More>>

ALSO:

PACER:

Prices Up 2.2%: Annual Inflation Highest In Over Five Years

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation," prices senior manager Jason Attewell said. "Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year". More>>

ALSO:

Undertaxed? NZ Income Tax Rate Second Lowest Among Developed Nations

New Zealand workers pay the second smallest portion of their income to the government among developed nations and less than half the average ratio of their Organisation for Economic Cooperation and Development peers. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news