The Reserve Bank of New Zealand (RBNZ) held its official cash rate (OCR) at 0.25% as widely expected anticipated on Wednesday.
The Reserve Bank of New Zealand (RBNZ) has retained its large scale asset purchase (LSAP) programme at NZ$100 billion ($70.55 billion). The Funding for Lending Programme (FLP) operation was unchanged.
Meanwhile, The Reserve Bank of New Zealand (RBNZ) said it needed some more time to observe the impact of new housing market measures and a gradual revival in tourism on its recovering economy.
Sharon Zollner, chief economist at ANZ said that “There was no reason for the RBNZ to deviate today from its ‘wait and see’ and ‘least regrets’ strategy, nor to set out to influence market pricing for OCR hikes, with the market on-board with the RBNZ’s message that tightening remains a distant prospect.”
RBNZ said “The Committee agreed that medium-term inflation and employment would likely remain below its remit targets in the absence of prolonged monetary stimulus.” RBNZ also said that inflation will spike in the near term, even exceed the 2% target midpoint due to supply chain disruptions and rising oil prices, but this will be temporary.
On the other hand, downsides were offset by the improving global outlook, and the return of Australian tourists to New Zealand next week through a COVID-19 ‘travel bubble’ arrangement.
Elsewhere, Earlier in the day, Australia’s Westpac Consumer Confidence for April showed strong figures of 6.2% versus 2.6% previous expansion. Also on the favorable side was the news that Queensland will be early in removing the coronavirus (COVID-19)-led activity restrictions. As Australia is the New Zealand’s biggest trading partner and hence any positive for the Australia favors the kiwi.
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