INDEPENDENT NEWS

Official Cash Rate unchanged at 1.75 percent

Published: Thu 10 Aug 2017 09:27 AM
Official Cash Rate unchanged at 1.75 percent
Statement by Reserve Bank Governor Graeme Wheeler:
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 1.75 percent.
10 August 2017 - Global economic growth has become more broad-based in recent quarters. However, inflation and wage outcomes remain subdued across the advanced economies, and challenges remain with on-going surplus capacity. Bond yields are low, credit spreads have narrowed and equity prices are at record levels. Monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.
The trade-weighted exchange rate has increased since the May Statement, partly in response to a weaker US dollar. A lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth.
GDP in the March quarter was lower than expected, adding to the softening in growth observed at the end of 2016. Growth is expected to improve going forward, supported by accommodative monetary policy, strong population growth, an elevated terms of trade, and the fiscal stimulus outlined in Budget 2017.
House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints, and a tightening in credit conditions. This moderation is expected to persist, although there remains a risk of resurgence in prices given continued strong population growth and resource constraints in the construction sector.
Annual CPI inflation eased in the June quarter, but remains within the target range. Headline inflation is likely to decline in coming quarters as the effects of higher fuel and food prices dissipate. The outlook for tradables inflation remains weak. Non-tradables inflation remains moderate but is expected to increase gradually as capacity pressure increases, bringing headline inflation to the midpoint of the target range over the medium term. Longer-term inflation expectations remain well anchored at around 2 percent.
Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain and policy may need to adjust accordingly.
More information:
• Read the Monetary Policy Statement
• Watch the Monetary Policy Statement press conference live-stream at NZT 10am
ENDS

Next in Business, Science, and Tech

ScoopPro: Helping The Education Sector Get More Out Of Scoop
By: Scoop Publishing
Destiny International Trust, Te Hahi o Nga Matamua Holdings
By: Charities Registration Board
57M Uber data breach "utterly preventatable"
By: Centrify
Scoop 3.0 - How You Can Help Scoop’s Evolution
By: Scoop Publishing
Dairy product prices slide for fourth straight auction
By: BusinessDesk
Butter at Record $5.67/Block & High Vegetable Prices
By: Statistics New Zealand
New research finds herbicides cause antibiotic resistance
By: University of Canterbury
Fonterra's NZ milk collection lifts slightly in October
By: BusinessDesk
Olives Squeeze Out Luncheon Sausage
By: Statistics New Zealand
Salvation Army Prepares for Increased Need
By: The Salvation Army New Zealand
Herbicides linked to antibiotic resistance - Expert reaction
By: Science Media Centre
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media