Home / Business and Economy / NZ Inflation May Cool This Quarter, Central Bank Signals
NZ Inflation May Cool This Quarter, Central Bank Signals
19 Feb
Summary
- New Zealand's inflation is expected to return to target this quarter.
- The central bank kept the official cash rate at 2.25% on Wednesday.
- Monetary policy will remain accommodative for some time, governor stated.
New Zealand's central bank believes inflation will slow to its target band this quarter. Reserve Bank of New Zealand Governor Anna Breman stated on Thursday that while last quarter's 3.1% inflation was too high, it was largely due to volatile tradable items.
The bank decided to hold the official cash rate at 2.25% on Wednesday, with policy remaining accommodative. Breman indicated that rate hikes are not planned unless inflationary pressures and economic growth accelerate significantly. However, revised forecasts suggest a potential rate hike by the year's end, a more dovish outlook than markets anticipated.
Discussions within the Monetary Policy Committee focused on how firms might adjust pricing as the economy recovers. Breman acknowledged the uncertainty surrounding future business behavior and the economy's capacity to sustain higher interest rates.
