No New Changes for Official Cash Rate
In an announcement provided by The Reserve Bank of New Zealand today, the bank continued to hold its official cash rate at a low 0.25%, and also maintained its large scale asset purchase (LSAP) programme at NZ$100 billion.
Why OCR Was Left Unchanged
Reasoning behind the OCR being unchanged was due to the fact that the current levels of monetary stimulus are needed to meet consumer price inflation and employment remit. The RBNZ has advised that the economic outlook for New Zealand remains “highly uncertain” as certain factors that have supported employment and inflation at higher levels than anticipated are only short term.
The RBNZ also stated that current stimulatory monetary settings will remain unchanged until there is guaranteed consumer price inflation sustained at 2% midpoint target and that employment will be either at its level of maximum sustainability or exceed those levels. They have also revised forecasts for growth, employment and inflation, which all three have returned results that were better than expected since the last policy meeting which was held in November.
Following the announcement, the NZD dropped 0.2%, settling at $0.7359.