OCR unchanged at 3.5 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2015-04-01

OCR unchanged at 3.5 percent
The Reserve Bank today left the Official Cash Rate unchanged at 3.5 percent.
Published:
30 April 2015
Statement issued by Reserve Bank
Governor Graeme Wheeler:
The Reserve Bank today left the Official Cash Rate unchanged at 3.5
Trading partner growth continues at around its long-term average, but remains
dependent on highly accommodative monetary settings. Policy interest rates are
at record lows and many European government bonds are trading at negative
yields. Looking ahead, considerable uncertainties exist in Europe, China and
Australia, and on the timing of US monetary policy adjustment, although global
growth should be boosted by the decline in world oil prices. Crude oil prices
are almost 50 percent below their July 2014 level, with increasing supply mostly
contributing to this fall.
The New Zealand economy continues to grow at an annual rate of around 3
percent, supported by low interest rates, high net immigration and construction
activity, and the fall in fuel prices. House price inflation is elevated in
Auckland. However, lower dairy incomes, lingering effects of drought, fiscal
consolidation, and the high exchange rate are weighing on the outlook for
Lower fuel prices, coming on top of the high exchange rate and low global
inflation, lowered annual CPI inflation to 0.1 percent in the March quarter.
Underlying inflation remains low and is expected to pick up gradually. Monetary
policy will focus on the medium-term trend in inflation. The Bank expects to
keep monetary policy stimulatory, and is not currently considering any increase
in interest rates.
We are watching closely the ongoing impact on tradables inflation from global
forces and the high New Zealand dollar.  On a trade-weighted basis, the New
Zealand dollar continues to be unjustifiably high and unsustainable in terms of
New Zealand's long-term economic fundamentals.   The
appreciation in the exchange rate, while our key export prices have been
falling, is unwelcome.
The timing of future adjustments in the OCR will depend on how inflationary
pressures evolve in both the non-traded and traded sectors.  It would be
appropriate to lower the OCR if demand weakens, and wage and price-setting
outcomes settle at levels lower than is consistent with the inflation
The Bank will continue to monitor and carefully assess the emerging flow of
economic data.
Media Contact:
Mike Hannah, Head
of Communications,
Ph 04 471 3671, 021 497 418,
mike.hannah@rbnz.govt.nz