The Reserve Bank of New Zealand on Thursday held its Official Cash Rate at the record low of 1.75 percent for the seventh straight meeting.
The decision was in line with expectations following a 0.25 percent rate cut last November.
The central bank has pared a collective 0.50 percent from its benchmark in the last 14 months, lowering the rate in six of the last 18 meetings after six straight sessions with no change.
The global economy has continued to improve in recent months, RBNZ Governor Graeme Wheeler noted.
“Inflation and wage outcomes remain subdued. Commodity prices are relatively stable. Bond yields and credit spreads remain low and equity prices are near record levels. Monetary policy remains easy in the advanced economies but is gradually becoming less stimulatory,” Wheeler said in a statement accompanying the decision.
He also noted that the exchange rate has eased slightly, which should help with inflation and provide more balanced growth.
“GDP in the June quarter grew broadly in line with expectations, following relative weakness in the previous two quarters. Employment growth has been strong and GDP growth is projected to strengthen, with a weaker outlook for housing and construction offset by accommodative monetary policy, the continued high terms of trade, and increased fiscal stimulus,” Wheeler said.
Annual inflation remained subdues in the third quarter but still remains well within the target range, the bank said.
Longer term inflation remains anchored at around 2 percent.
“Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, and policy may need to adjust accordingly,” Wheeler said.
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