WELLINGTON — New Zealand’s central bank held its official cash rate at a record low of 0.25% on Wednesday, as expected, saying the current levels of monetary stimulus were needed to meet its consumer price inflation and employment remit.
The Reserve Bank of New Zealand (RBNZ) also retained its large scale asset purchase (LSAP) program at NZ$100 billion ($73.24 billion). The Funding for Lending Programme (FLP) operation was unchanged.
Economists in a Reuters poll had unanimously expected the RBNZ to hold rates.
“The Committee agreed to maintain its current stimulatory monetary settings until it is confident that consumer price inflation will be sustained at the 2% per annum target midpoint, and that employment is at or above its maximum sustainable level,” it said in the statement.
Meeting these requirements will necessitate considerable time and patience, it added.
The New Zealand dollar dropped 0.2% after the announcement, settling at $0.7359.
RBNZ said in its Monetary Policy Statement that the recent resilience in the domestic economy implies that no significant additional stimulus is required at this time.
While the RBNZ sounded a cautious note about the outlook, analysts expect improving conditions to add to the case for reduced stimulus…