|Published : 22 Sep 2016, 15:04:58|
New Zealand central bank keeps interest rates unchanged
The Reserve Bank of New Zealand (RBNZ) on Thursday held its official cash rate (OCR) at 2.0 per cent, but issued a warning on the country's over-valued dollar, which was causing negative inflation.
In its regular OCR review the RBNZ noted a range of pressures slowing global growth, including ongoing "political uncertainty," unprecedented levels of monetary stimulus and significant surplus capacity in many economies.
These were suppressing global inflation and economies with low interest rates relative to New Zealand were pushing up the New Zealand dollar exchange rate, RBNZ Governor Graeme Wheeler said.
"The high exchange rate continues to place pressure on the export and import-competing sectors and, together with low global inflation, is causing negative inflation in the tradables sector," Wheeler said.
The domestic growth was expected to remain supported by strong net immigration, construction activity, tourism, and accommodative monetary policy.
House price inflation remains excessive, posing concerns for financial stability, said the RBNZ governor.
He said that there are indications that recent macro-prudential measures and tighter credit conditions in recent weeks are having a moderating influence.
Headline inflation at 0.4 per cent was being held below the RBNZ's target band of 1.0 per cent to 3.0 per cent by continuing negative tradables inflation.
He left the door open for future imminent cuts in the OCR, saying they might be needed to ensure that inflation settled near the middle of the target range, according to a news agency report.