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WELLINGTON, Feb 24 (Reuters) – New Zealand’s central bank kept its official cash rate at a low of 0.25% on Wednesday, as expected, saying current levels of monetary stimulus were needed to meet consumer price inflation and area of operation.
Reserve Bank of New Zealand (RBNZ) also secured the NZ $ 100 billion ($ 73.24 billion) large-scale asset purchase (LSAP) program. There was no change to the operation of the Loan Financing Program (FLP).
Economists in a Reuters poll had unanimously expected the RBNZ to maintain levels.
“The Committee has agreed to maintain its current stimulus funding conditions so that it can be confident that consumer price inflation will be maintained at the 2% target mid-year point, and that employment will be at or above the highest sustainable level, ”they said in the statement.
Meeting these requirements requires a lot of time and patience, he said.
The New Zealand dollar fell 0.2% after the news, settling at $ 0.7359.
RBNZ said in its Monetary Policy Statement that the recent resilience in the domestic economy means that no further significant stimulus is needed at this time.
While the RBNZ sang a cautious note about the outlook, analysts expect improved scenarios to exacerbate the case for less stimulus.
“The Reserve Bank of New Zealand felt dovish when it left the policy position unchanged today, but we still expect the Bank to start raising rates next year,” said Ben Udy, Economist of Australia & Zealand Modern at Capital Economics.
“While the Bank emphasized its willingness to provide further incentives and its ability to apply negative rates, the Bank’s outlook now shows that less incentive is needed. ”
The central bank cut interest rates by 75 basis points in March last year and said it would remain unchanged for 12 months, while also introducing a quantitative rebate to support a shattered economy. hit with border closure and coronavirus locks.
But a faster economic recovery and concerns about a red hot real estate market with historically low interest rates have left markets suggesting that the discount cycle has ended and that rate hikes could come sooner. than expected.
Despite better economic data, the RBNZ, which is one of the most likely central banks, remained cautious that the outlook for the economy remains “very uncertain”.
“This continuing uncertainty is expected to hamper business investment and growth in household spending,” he said, adding that inflation and employment were likely to remain below its medium-term remit targets. without long money incentives.
RBNZ also revised its forecasts for growth, employment and inflation, all of which have yielded better-than-expected results since the last policy meeting in November. ($ 1 = 1.3654 New Zealand dollars) (Reporting by Praveen Menon and Renju Jose; Editing by Sam Holmes)