New Zealand’s central bank kept its benchmark interest rate at a record low of 1.75 percent on Thursday, and reiterated it would remain unchanged for a while yet, while adding that the economic outlook was promising.
The Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler said monetary policy “will remain accommodative for a considerable period”, sticking to language used in the central bank’s statements in February, March and May.
Wheeler said that a lower New Zealand dollar, which has risen by around 3.0 percent since May, would help rebalance the growth outlook. The NZ dollar jumped towards four-month highs to $0.7280 from around $0.7211 before the statement was released. It then began to retrace and was trading around $0.7247.
The RBNZ maintained a reasonably optimistic tone at its policy meeting, says Richard Grace, Commonwealth Bank ‘s global head of currency strategy.
The central bank took away a reference made in the May statement that developments since the last monetary policy statement had been neutral for monetary policy, which economists at the time considered to be an “aggressively neutral” position.
“The broad message is unchanged – the Reserve Bank is cautious, it’s watchful, but it’s neutral. It looks like the hurdle from them to shift from that neutral stance in either direction remains very high,” Philip Borkin, senior economist at ANZ.