INDEPENDENT NEWS

Official Cash Rate unchanged at 1.75 percent

Published: Thu 9 Aug 2018 09:09 AM
9 August 2018
Statement by Reserve Bank Governor Adrian Orr:
Tena koutou katoa, welcome all.
The Official Cash Rate (OCR) remains at 1.75 percent. We expect to keep the OCR at this level through 2019 and into 2020, longer than we projected in our May Statement. The direction of our next OCR move could be up or down.
While recent economic growth has moderated, we expect it to pick up pace over the rest of this year and be maintained through 2019.
Robust global growth and a lower New Zealand dollar exchange rate will support export earnings. At home, capacity and labour constraints promote business investment, supported by low interest rates. Government spending and investment is also set to rise, while residential construction and household spending remain solid.
The labour market has tightened over the past year and employment is roughly around its maximum sustainable level. We expect the unemployment rate to decline modestly from its current level.
There are welcome early signs of core inflation rising. Inflation will increase towards 2 percent over the projection period as capacity pressures bite. This path may be bumpy however, with one-off price changes from global oil prices, a lower exchange rate, and announced petrol excise tax rises expected. We will look through this volatility as appropriate, and only respond to any persistent movements in inflation.
Risks remain to our central forecast. The recent moderation in growth could last longer. Low business confidence can affect employment and investment decisions. Conversely, there is a chance that inflation could increase faster if cost pressures can pass through into higher prices and impact inflation expectations.
We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.
Meitaki, thanks.
More information:
Read the Monetary Policy Statement
ends

Next in Business, Science, and Tech

Govt raids PGT for $40M top-up to rural broadband roll-out
By: BusinessDesk
Auckland-Chicago named a top 10 ‘most exciting’ new route
By: Air New Zealand
ESR ups its reporting on Meningococcal disease
By: ESR
Game-changing technology for 3D printing tiny structures
By: KiwiNet
PGF to improve regional digital connectivity
By: New Zealand Government
PGF investment in Manawatū-Whanganui
By: New Zealand Government
PGF investment in Advanced Aviation Hub in Whanganui
By: New Zealand Government
PGF investing to expand National Driver Training Centre
By: New Zealand Government
PGF investment to fast track regional freight hub
By: New Zealand Government
$48 million Provincial Growth Fund announcements welcomed
By: Horizons Regional Council
High unemployment drives teen to transform his district
By: Horowhenua District Council
Manawatu-Whanganui PGF spending is just picking winners
By: New Zealand Taxpayers' Union
Meningococcal W – Expert Reaction
By: Science Media Centre
Increased vigilance needed for meningococcal disease
By: Ministry of Health
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media