Official Cash Rate reduced to 3.0 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2015-07-01

Official Cash Rate reduced to 3.0 percent
The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis points to 3.0 percent.
Published:
23 July 2015
Statement by
Reserve Bank Governor Graeme Wheeler:
The Reserve Bank today reduced the Official Cash Rate (OCR) by 25 basis
points to 3.0 percent.
Global economic growth remains moderate, with only a gradual pickup in
activity forecast. Recent developments in China and Europe led to heightened
uncertainty and increased financial market volatility. Particular uncertainty
remains around the impact of the expected tightening in US monetary policy.
New Zealand's economy is currently growing at an annual rate of around
2.5 percent, supported by low interest rates, construction activity, and high
net immigration. However, the growth outlook is now softer than at the time of
. Rebuild activity in Canterbury appears to have
peaked, and the world price for New Zealand's dairy exports has fallen
Headline inflation is currently below the Bank's 1 to 3 percent target
range, due largely to previous strength in the New Zealand dollar and a large
decline in world oil prices. Annual CPI inflation is expected to be close to the
midpoint of the range in early 2016, due to recent exchange rate depreciation
and as the decline in oil prices drops out of the annual figure. A key
uncertainty is how quickly the exchange rate pass-through will occur.
House prices in Auckland continue to increase rapidly, but, outside Auckland,
house price inflation generally remains low. Increased building activity is
underway in the Auckland region, but it will take some time for the imbalances
in the housing market to be corrected.
The New Zealand dollar has declined significantly since April and, along with
lower interest rates, has led to an easing in monetary conditions. While the
currency depreciation will provide support to the export and import competing
sectors, further depreciation is necessary given the weakness in export
commodity prices.
A reduction in the OCR is warranted by the softening in the economic outlook
and low inflation. At this point, some further easing seems likely.
Media Contact:
Mike Hannah, Head of Communications,
Ph 04 471 3671, 021 497 418,
mike.hannah@rbnz.govt.nz