New Zealand central bank keeps rates on hold

Reserve Bank keeps OCR at 1.75 per cent

Reserve Bank keeps OCR at 1.75 per cent

New Zealand's economy over the last five years grew on average at about 3% a year - above trend - while employment growth of 3% a year had also been above trend, Wheeler said.

"We're still very much in the neutral stage where for the foreseeable future we don't see the OCR (official cash rate) increasing", said Wheeler, addressing his last monetary policy news conference before his five-year term ends next month.

Reserve Bank of New Zealand NZ 796 Assistant Governor John McDermott said on Thursday that the central bank was "slightly more uncomfortable" with the level of the NZ dollar than it was in May.

The kiwi traded at US73.26 cents as at 8am on Thursday in Wellington from US73.16c late Wednesday.

Governor Wheeler reiterated that the monetary policy would remain accommodative for some time. The front fell off many commodity markets. Swaps data show about an 80 percent chance of an increase by next August.

"Longer-term inflation expectations remain well anchored at around 2.0 per cent", he said, which would place it in the middle of the targeted 1.0-3.0 per cent inflation band.

But he said headline inflation was likely to decline in coming quarters as the effects of higher fuel and food prices dissipate.

The central bank expected growth to speed up, supported by low interest rates, strong population growth and fiscal stimulus in the 2017 budget.

It later noted the central bank had the capability to intervene in the foreign exchange market, although historically the RBNZ has been very reluctant to do so. Non-tradable inflation remains moderate but is expected to increase gradually as capacity pressure increases, bringing headline inflation to the midpoint of the target range over the medium term.

In the first quarter of this year, New Zealand's economy grew a below trend 0.5%, after an anemic 0.4% expansion in the fourth quarter blamed on temporary factors including an quake.

According to RBNZ policy makers, global economic growth increased and became more broad-based but wage growth subdued due to surplus capacity.

Yes, low productivity growth was disappointing - zero or negative on some measures - but the RBNZ doesn't have much control over that; Wheeler later encouraged Parliament's Finance and Expenditure Select Committee of MPs to focus on how to improve our productivity conundrum. Annual house-price growth slowed to 2.8 percent in June from 5 percent in May and 10 percent in March, the Real Estate Institute of New Zealand said last month.

Reserve Bank Governor Graeme Wheeler was both positive and defiant during the final press conference of his five-year term.

The bank also cited softening house price growth - a previous inflationary worry - attributing the slow-down to loan-to-value restrictions, affordability, and tightening credit conditions. RBNZ expects moderation to persist but the risk remains due to population growth and resource constraints.

Recommended News

  • "Ape Who Went to College" Dies

    According to Zoo Atlanta , at 39, Chantek was one of the oldest living male orangutans within the North American population. The ape used his allowance to negotiate for his favorite treats, like auto rides and fast food.
    Sri Lanka's Foreign Min resigns over alleged scandal

    Sri Lanka's Foreign Min resigns over alleged scandal

    Last week, Karunanayake appeared before a presidential commission of enquiry in connection with the bond sale scandal in 2015. The move was praised by Sri Lanka's prime minister Ranil Wickremesinghe who defended Mr Karunayake.
    Moscow: Anti-Caracas Sanctions Hamper Normalization of Situation in Venezuela

    Moscow: Anti-Caracas Sanctions Hamper Normalization of Situation in Venezuela

    Adan Chavez has been appointed secretary of the new assembly and also is a former governor and minister in Venezuela's government. Also facing sanctions was Bladimir Armas, a National Guard colonel accused by government critics of human rights abuses.
  • North Korea spat rattles Wall Street

    North Korea spat rattles Wall Street

    While gold, a safe-haven favorite, pared some gains, it was last up 1.2 percent, at around its highest since mid-June. Priceline sank 7.8 percent as it projected third-quarter earnings below Wall Street analyst expectations.
    Klopp missing key midfielder ahead of Watford clash

    Klopp missing key midfielder ahead of Watford clash

    The more you read about it, the more people you speak to, you realise people put two and two together and make 26. I'm not going to walk into the team straightaway, there's quality players, especially in midfield .
    Trump 'very surprised' by FBI Manfort raid, saying it sends 'strong signal'

    Trump 'very surprised' by FBI Manfort raid, saying it sends 'strong signal'

    Trump called Manafort a "decent man" but suggested that he probably made money from consultants "all over the place". The previous day, Mr Manafort had met Senate Intelligence Committee staff, the newspaper reported .
  • National Football League  boycott petition reaches 100000 signatures over Kaepernick

    National Football League boycott petition reaches 100000 signatures over Kaepernick

    As for the label that Colin Kaepernick picked up as anti-American for sitting during the anthem, D.L. Seattle, the only team Kaepernick visited, eventually didn't sign him either .
    Plans Quarterly Dividend of $0.03 (ODP)

    Plans Quarterly Dividend of $0.03 (ODP)

    Finally, BidaskClub upgraded Office Depot from a hold rating to a buy rating in a research note on Saturday, June 10th. The stock has Return on Assets (ROA) of 0 percent. 108,268 are owned by Orleans Capital Mngmt Corporation La.
    The unvarnished truth about climate change

    The unvarnished truth about climate change

    The report confirmed what NOAA, along with the World Meteorological Organization, announced in January about global temperatures. A White House official told CNN it will "withhold comment on any draft report before its scheduled release date".
  • Sushma in Nepal, meets Deuba amid China's looming presence, Doklam

    Sushma in Nepal, meets Deuba amid China's looming presence, Doklam

    Both sides agreed that there are vast possibilities for cooperation in infrastructure, connectivity and energy. Sushma Swaraj, according to Bhattarai, told Deuba that India is all set to welcome Deuba in New Delhi .
    Why you should never put your feet on the dashboard

    Why you should never put your feet on the dashboard

    Every hour of every day because every time I put pressure on my leg I feel it, she said. "I regret it every single day". Catherine Morales: Thank you for sharing, I took this to heart and made it a lesson to share with my daughter.

    DeShone Kizer leads Cleveland Browns past New Orleans Saints in preseason opener

    In the 4th quarter, on 4th down, DeShone Kizer completed a 45-yard pass to Jordon Payton for the go-ahead Brown's touchdown. Cody Kessler , the displaced No. 1 quarterback, bridged the gap between the two starting contenders.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.