RBNZ Minutes: Committee agreed that the OCR needs to stay at restrictive levels for the foreseeable future

The current level of interest rates is constraining spending and hence inflation pressure, as anticipated and required.

Committee agreed that the OCR needs to stay at restrictive levels for the foreseeable future.

New Zealand economy is evolving broadly as anticipated.

Headline inflation and inflation expectations have declined, but measures of core inflation remain too high.

In the near term, there is a risk that activity and inflation measures do not slow as much as expected.

Committee is confident that with interest rates remaining at a restrictive level for some time, consumer price inflation will return to within its target range of 1 to 3% per annum.

Committee noted inflation is still expected to decline within the target band by the second half of 2024.

Committee agreed that the risks around the inflation projection remain balanced.

Committee noted that the estimate of the nominal neutral OCR has increased by 25 basis points to 2.25% within the projections, consistent with the Reserve Bank’s indicator suite.

Official cash rate at 5.54% in December 2023 (pvs 5.5%).

RBNZ sees official cash rate at 5.57% in September 2024 (pvs 5.43%).

RBNZ sees twi NZD at around 71.0% in September 2024 (pvs 71.5%).

RBNZ sees annual CPI 2.7% by September 2024 (pvs 2.7%).

RBNZ sees official cash rate at 5.5% in December 2024 (pvs 5.3%).

RBNZ sees official cash rate at 3.38% in September 2026.