Today RBNZ Governor announced that the OCR will be kept at 1.75%.
The governor is quoted as saying “Economic growth and employment in New Zealand remain robust, near their sustainable levels. However, consumer price inflation remains below the 2 percent mid-point of our target due, in part, to recent low food and import price inflation, and subdued wage pressures.” This is why the RBNZ chose not to increase the rate.
However, ongoing spending and investment, by both households and government, is expected to support economic growth and employment demand. Business investment should also increase due to emerging capacity constraints. So the RBNZ projects the New Zealand’s consumer price inflation gradually rise to our 2 percent annual target. He is hinting that the OCR may rise (although not likely until September in our opinion).
Economists think that Reserve Bank’s forecast shows the OCR rising to 1.9 per cent in December 2019 and a full rate increase is still signalled by March 2020 when the benchmark rate is forecast to be 2 per cent.
If you are interested in how OCR works, click here.