Insights
- New Zealand's inflation is gradually returning to the 1-3 per cent target band, prompting a reduction in the OCR to 5.25 per cent.
- With economic growth below trend and declining global inflation, the Reserve Bank of New Zealand expects consumer price inflation to stay near the target mid-point.
- Further easing will depend on stable expectations.
New Zealand’s annual consumer price inflation is gradually returning to within the Monetary Policy Committee’s target band of 1 to 3 per cent, leading to a reduction in the official cash rate (OCR) to 5.25 per cent. This adjustment reflects surveyed inflation expectations, firms’ pricing behaviour, headline inflation, and various core inflation measures, all aligning with low and stable inflation levels.
New Zealand's inflation is gradually returning to the 1-3 per cent target band, prompting a reduction in the OCR to 5.25 per cent.
With economic growth below trend and declining global inflation, the Reserve Bank of New Zealand expects consumer price inflation to stay near the target mid-point.
Further easing will depend on stable expectations.
Economic growth in New Zealand remains below trend, and inflation is declining across advanced economies. Some central banks have already begun reducing policy interest rates. Additionally, imported inflation into New Zealand has decreased, aligning more closely with pre-pandemic levels, Reserve Bank of New Zealand said in a press release.
Looking forward, consumer price inflation in New Zealand is expected to remain near the target mid-point over the foreseeable future. As a result, the Monetary Policy Committee has chosen to ease the level of monetary policy restraint. The pace of further easing will depend on the committee’s confidence that pricing behaviour continues to align with a low inflation environment and that inflation expectations remain anchored around the 2 per cent target.
Fibre2Fashion News Desk (DP)
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