subscribe to our newsletter
RBNZ announces another cash rate cut

RBNZ announces another cash rate cut

For the second consecutive month, the Reserve Bank of New Zealand has reduced its official cash rate by 25 basis points.

Graeme Wheeler, governor of New Zealand’s central bank, said the rate cut – which takes the rate to 3.0 per cent – is due to the softening in the country’s economic outlook and low inflation.

“New Zealand’s economy is currently growing at an annual rate of around 2.5 per cent, supported by low interest rates, construction activity and high net immigration,” he said.

“However, the growth outlook is now softer than at the time of the June statement. Rebuild activity in Canterbury appears to have peaked, and the world price for New Zealand’s dairy exports has fallen sharply.”

Mr Wheeler said headline inflation is currently below the central bank’s target range of one per cent to three per cent, due largely to previous strength in New Zealand’s dollar and a large decline in global oil prices.

“Annual CPI inflation is expected to be close to the midpoint of the range in early 2016, due to recent exchange rate depreciation and as the decline in oil prices drops out of the annual figure. A key uncertainty is how quickly the exchange rate pass-through will occur,” he said.

House prices in Auckland are continuing to increase rapidly, but inflation generally remains low elsewhere, according to Mr Wheeler.

“Increased building activity is underway in the Auckland region, but it will take some time for the imbalances in the housing market to be corrected,” he said.

RBNZ announces another cash rate cut
mortgagebusiness logo

Latest News

A regional bank has revealed its full-year 2018 financial results, reporting a fall in residential mortgage settlements amid “challenging...

Former prime minister John Howard has called on the financial services royal commission to “bear in mind the stability and contribution”...

Macquarie Group has secured a stake in Investa Office Fund (IOF) months after Blackstone submitted a $3.1 billion takeover proposal. ...

FROM THE WEB

podcast

LATEST PODCAST: Cash rate to remain unchanged, corporate cops for the banks and a new type of credit card

Do you expect access to credit to get harder this year?