New Zealand Interest Rate

The Reserve Bank of New Zealand held its official cash rate (0CR) at a record low of 0.25% during its July meeting but decided to halt additional asset purchases under the Large Scale Asset Purchase programme by July 23th, 2021. Policymakers said some monetary stimulus remains necessary but its level could be reduced to minimize the risk of not meeting consumer price and employment objectives over the medium-term. They reiterated there will be near-term spikes in CPI inflation in Q2 and Q3, amid factors that are either one-off in nature or expected to be temporary. The committee agreed that more persistent consumer price inflation pressure is expected to build over time. The board added recent data indicate the economy remains robust despite the ongoing impact of international border restrictions. Aggregate economic activity is above its pre-COVID-19 level, with household spending and construction output at high levels.