The Reserve Bank Monetary Policy Committee today agreed to keep the Official Cash Rate at 5.50% 🏡🏦
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Mortgage Adviser New Zealand | Michael Anastasiadis
Today, The Reserve Bank Monetary Policy Committee today agreed to keep the Official Cash Rate at 5.50%.
– Annual consumer price inflation remains above the Committee’s 1 to 3 percent target band, and components of domestic services inflation persist. The Committee agreed that monetary policy needs to remain restrictive to ensure inflation returns to target within a reasonable timeframe.
– The Committee noted that persistent inflation in some of New Zealand’s key trading partners has led to fewer policy interest rate cuts being priced in by financial markets.
– The average interest rate across the stock of mortgage borrowers continues to increase and is near its projected peak of 6.5 percent.
– Bank funding costs are expected to increase over the forecast period as funding sources normalise, with a reversion to higher cost wholesale and term deposit funding. Higher funding costs in turn are expected to maintain upward pressure on lending rates over the medium term.
– Monetary policy may need to tighten and/or remain restrictive for longer if wage and price setters do not align with weaker productivity growth rates.
– The Committee noted that annual headline CPI inflation was expected to return to the target band in the December quarter of this year.
– The Committee agreed that interest rates need to remain at a restrictive level for a sustained period to ensure annual headline CPI inflation returns to the 1 to 3 percent target range.