NZ RBNZ Monetary Policy Statement

Annual consumer price inflation has declined and is now close to the midpoint of the Monetary Policy Committee’s 1 to 3 percent target band. Inflation expectations are also close to target and core inflation is converging to the midpoint. If economic conditions continue to evolve as projected, the Committee expects to be able to lower the OCR further early next year. Economic activity in New Zealand remains subdued and output continues to be below its potential. With excess productive capacity in the economy, inflation pressures have ...

Restrictive monetary policy has reduced capacity pressures in the New Zealand economy and lowered consumer price inflation. Annual consumer price inflation is expected to return to within the Committee’s 1 to 3 percent target range by the end of 2024. The welcome decline in inflation in part reflects lower inflation for goods and services imported into New Zealand. Globally, consumer price inflation has declined from 30-year highs in many advanced economies. However, services inflation is receding slowly, and expected policy interest ...

The Monetary Policy Committee today agreed to hold the Official Cash Rate (OCR) at 5.50%. Over the past year or so, the New Zealand economy has evolved broadly as anticipated by the Committee. Core inflation and most measures of inflation expectations have declined, and the risks to the inflation outlook have become more balanced. However, headline inflation remains above the 1 to 3 percent target band, limiting the Committee’s ability to tolerate upside inflation surprises. Restrictive monetary policy and lower global growth have contributed to aggregate demand slowing to better match the supply capacity of the New Zealand economy. With high immigration and weaker demand growth, capacity constraints in the New Zealand labour market have eased. However, recent high population growth is supporting aggregate spending, as evident in upward pressure on dwelling rents, for example. Internationally, global economic growth remains below trend and is expected to slow further during 2024. This subdued environment will support a further moderation in New Zealand’s import price inflation. The outlook for the China economy remains particularly weak relative to recent historical norms, with structural factors constraining longterm growth. A more general risk to global growth is that central banks may need to kee post: RBNZ CONFIDENT CURRENT OCR LEVEL RESTRICTING DEMAND post: RBNZ LIMITS ABILITY TO TOLERATE UPSIDE INFLATION SURPRISES AS HEADLINE INFLATION EXCEEDS TARGET BAND post: RBNZ: OCR TO REMAIN RESTRICTIVE FOR EXTENDED PERIOD TO ENSURE DESIRED OUTCOME post: RBNZ MINUTES: RECENT DROPS IN CORE INFLATION AND BUSINESS INFLATION EXPECTATIONS ARE ENCOURAGING, BUT THEY REMAIN ABOVE THE 2 PERCENT MID-POINT OF THE COMMITTEE’S TARGET BAND.