ZCZC
BCN-09
NZEALAND-RATE-ECONOMY
New Zealand extends base-rate freeze to two years
WELLINGTON, Nov 8, 2018 (BSS/AFP) – New Zealand’s freeze on its benchmark
interest rate extended to two years Thursday, with the central bank saying
there was little prospect of it moving from record lows until 2020.
The official cash rate (OCR) has been unchanged at 1.75 percent since
November 2016 as the Reserve Bank of New Zealand takes a hands-off approach
to maintaining economic growth.
Governor Adrian Orr indicated there was no compelling reason for change.
“The OCR remains at 1.75 percent. We expect to keep the OCR at this level
through 2019 and into 2020,” he said in a statement.
“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.”
Official data shows unemployment in the September quarter fell 0.5 points
to 3.9 percent, a 10-year low that Orr described as “around its maximum
sustainable level”.
The economy grew 2.7 percent in the 12 months to June, although Orr said
one-off factors were behind the strong result and there were downside risks
in the short term.
He expected inflation — which hit 1.9 percent in the 12 months to
September 30 — to stabilise around the bank’s 2.0 percent target.
Orr said the mixed data meant that when the base rate eventually moved, it
could go up or down.
“There are both upside and downside risks to our growth and inflation
projections,” he said.
“As always, the timing and direction of any future OCR move remains data
dependent.”
BSS/AFP/HR/0940