Reserve Bank of New Zealand: “A Decline in the Exchange Rate Is Needed”

Reserve Bank of New Zealand: “A Decline in the Exchange Rate Is Needed”

February 8, 2017

New Zealand’s Official Cash Rate had stayed at 3.5% from July 2014 to the policy review in June 2015 but was subsequently halved in seven steps through the final meeting of 2016 in December. At this year’s first central bank meeting, the 1.75% OCR level was retained and upbeat assessments were expressed about the strength of domestic demand, well-anchored medium-term 2% inflation expectations, and the likelihood of CPI inflation returning gradually to the target mid-point. A released statement also welcomes softening house price inflation. The one area of displeasure involves the kiwi about which the statement bluntly proclaims, “a decline in the exchange rate is needed. The exchange rate remains higher than is sustainable for balanced growth and, together with low global inflation, continues to generate negative inflation in the tradables sector.”

Copyright 2017, Larry Greenberg. All rights reserved. No secondary distribution without express permission. 

Tags: Reserve Bank of New Zealand




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