Wellington, Aug 14 – New Zealand’s central bank eased the level of monetary policy restraint by reducing the official cash rate (OCR) by 25 basis points to 5.25 per cent on Wednesday due to eased inflation.
New Zealand’s annual consumer price inflation is returning to within the Monetary Policy Committee’s (MPC) 1 to 3 per cent target band, Xinhua news agency reported, citing a statement of the Reserve Bank of New Zealand (RBNZ).
“Surveyed inflation expectations, firms’ pricing behaviour, headline inflation, and a variety of core inflation measures are moving consistent with low and stable inflation,” the statement said.
Economic growth remains below trend, inflation is declining across advanced economies, and some central banks have begun reducing policy interest rates, the RBNZ said.
Consumer price inflation in New Zealand is expected to remain near the target mid-point over the foreseeable future, it added.
The pace of further easing of the monetary policy restraint will depend on the MPC’s confidence that pricing behaviour remains consistent with a low inflation environment, and that inflation expectations are anchored around the 2 per cent target, the statement said.
Immediately following Wednesday’s OCR cut, New Zealand’s major retail banks cut their mortgage rates.
The OCR started to increase in late 2021 in response to New Zealand’s high inflation, to the current peak of 5.5 per cent in May last year. However, recent statistics show stalling economic growth, with slowing inflation and rising unemployment.