(Finance) – The Monetary Policy Committee of the Reserve Bank of New Zealand decided to maintain the Official Cash Rate (OCR) at 5.5%meeting the expectations of analysts.
The central bank explained that the current level of interest rates is limiting spending and thus inflationary pressure, as expected and required. The Committee agreed that theOCR must remain at restrictive levels for the foreseeable future to ensure that annual consumer price inflation returns to the target range of 1-3%, while supporting maximum sustainable employment.
The New Zealand economy continues to slow in the parts of the economy most sensitive to interest rates. Labor shortages are easing as overall demand eases and immigration increases labor resources. Headline inflation and inflation expectations have declined, but the measures of underlying inflation remain too high.
The Reserve Bank of New Zealand notes that, in the near term, there is a risk that measures of activity and inflation will not slow down as much as expected. In the medium term, a greater slowdown in global economic demand, particularly in China, could weigh more on commodity prices and New Zealand’s total export income.