The Reserve Bank of New Zealand on Thursday kept its Official Cash Rate at the record low of 1.75 percent for the 14th straight meeting.
The decision was in line with expectations following a 0.25 percent rate cut in November 2016.
The central bank has pared a collective 0.50 percent from its benchmark in the last 22 months, lowering the rate in six of the last 21 meetings after six straight sessions with no change.
GDP growth is expected to pick up through 2019 and the OCR is expected to be unchanged through next year and into 2020, RBNZ Governor Adrian Orr noted.
“Monetary stimulus and population growth underpin household spending and business investment,” Orr said. “Government spending on infrastructure and housing also supports domestic demand. The level of the New Zealand dollar exchange rate will support export earnings.”
Some downside risks persist, he added – including geopolitical risks and unexpected policies pertaining to major trading partners.
“Downside risks to the growth outlook remain,” Orr said. “Weak business sentiment could weigh on growth for longer. Trade tensions remain in some major economies, raising the risk that trade barriers increase and undermine global growth.”
Core consumer prices are expected to gradually rise to the mid-point of the central bank’s target range at 2 percent – although upside risks to the inflation outlook also exist.
“We will look through this volatility as appropriate,” Orr said. “We will keep the OCR at an expansionary level for a considerable period to contribute to maximizing sustainable employment and maintaining low and stable inflation.”
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