Reserve Bank: Official Cash Rate to remain unchanged

Author
NZ Herald,
Publish Date
Wed, 18 Aug 2021, 2:23PM
Reserve Bank Governor Adrian Orr. (Photo / Mark Mitchell)
Reserve Bank Governor Adrian Orr. (Photo / Mark Mitchell)

Reserve Bank: Official Cash Rate to remain unchanged

Author
NZ Herald,
Publish Date
Wed, 18 Aug 2021, 2:23PM

The Reserve Bank Monetary Policy Committee has agreed to keep the the Official Cash Rate (OCR) on hold at at 0.25 per cent for now.

Today's decision was made in the context of the Government's imposition of Level 4 Covid restrictions on activity across New Zealand, Reserve Bank Governor Adrian Orr said.

The committee said that their "least regrets policy stance" was still to further reduce the level of monetary stimulus so as to anchor inflation expectations and continue to contribute to maximum sustainable employment.

But they agreed, however, to keep the OCR unchanged at this meeting given the heightened uncertainty with the country in a lockdown.

The New Zealand dollar dropped another half a US cent to US68.73c from US69.36c just before the release.

The currency is now more than a cent down from US70.18c just before the announcement yesterday that the Delta variant had arrived in NZ.

"The first shock to the market was the 'no hike' but on closer inspection, the track seems to be consistent with hikes in October, November and February and then again in May next year.

The overall message to the market here is one of postponement rather than an abandonment of the desire to lift interest rates." David Croy, senior markets strategist at ANZ, said.

-additional reporting Jamie Gray