RBNZ keeps OCR on hold at 1.75 pct, unlikely to hike until late 2018

The Reserve Bank of New Zealand kept its OCR on hold at 1.75 percent on Thursday. It kept its “on hold” guidance for monetary policy. The central bank continues to be content to project no hike in interest rate in 2018.

The overall guidance of the central bank was exactly the same as the OCR Review of July and the May MPS. The central bank stated that the monetary policy would continue to be accommodative for a considerable period. Several uncertainties continue to be the same and policy might be required to adjust accordingly.

The RBNZ kept its OCR forecast unchanged, hinting at a flat OCR until late 2019 and gentle rises thereafter. Meanwhile, the central bank has issued a balance of alternative scenarios, one to the upside and one to the downside. The recent weaker data on global inflation, the economy and the housing market was talked about. The central bank also seems more worried that the low inflation of recent years is becoming embedded in inflation expectations, stated Westpac in a research report.

Meanwhile, the central bank is not pleased with the recent appreciation in the exchange rate. While these developments are all to the downside. There was very slightly change in the central bank’s growth or inflation forecasts for next year, and absolutely no change in the forward guidance for monetary policy.

“We remain comfortable with our forecast for no change in the OCR over 2018”, added Westpac.

At 23:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was neutral at 19.8655, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 26.7036. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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