The Reserve Bank of New Zealand lowered its official cash rate by 50bps to a fresh record low of 1 percent at its August 2019 meeting, while markets had forecast a smaller 25bps cut. This was the first rate cut since May, aiming to support inflation amid weakening global economic activity and ongoing trade tensions. Policymakers signaled further rate cuts could be possible. Interest Rate in New Zealand averaged 7.26 percent from 1985 until 2019, reaching an all time high of 67.32 percent in March of 1985 and a record low of 1 percent in August of 2019.

Interest Rate in New Zealand is expected to be 1.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in New Zealand to stand at 0.75 in 12 months time. In the long-term, the New Zealand Interest Rate is projected to trend around 1.25 percent in 2020, according to our econometric models.

New Zealand Interest Rate
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Calendar GMT Actual Previous Consensus TEForecast
2019-03-27 01:00 AM Interest Rate Decision 1.75% 1.75% 1.75% 1.75%
2019-05-08 02:00 AM Interest Rate Decision 1.50% 1.75% 1.50% 1.5%
2019-06-26 02:00 AM Interest Rate Decision 1.5% 1.5% 1.5% 1.5%
2019-08-07 02:00 AM Interest Rate Decision 1% 1.5% 1.25% 1.25%
2019-09-25 02:00 AM Interest Rate Decision 1% 1%
2019-09-25 03:00 AM RBNZ Press Conference
2019-11-13 01:00 AM Interest Rate Decision 0.75%



RBNZ Cuts Rate to Fresh Record Low

The Reserve Bank of New Zealand lowered its official cash rate by 50bps to a fresh record low of 1 percent at its August 2019 meeting, while markets had forecast a smaller 25bps cut. This was the first rate cut since May, aiming to support inflation amid weakening global economic activity and ongoing trade tensions. Policymakers signaled further rate cuts could be possible.

Reserve Bank of New Zealand policy statement:

The Official Cash Rate (OCR) is reduced to 1.0 percent. The Monetary Policy Committee agreed that a lower OCR is necessary to continue to meet its employment and inflation objectives.

Employment is around its maximum sustainable level, while inflation remains within our target range but below the 2 percent mid-point. Recent data recording improved employment and wage growth is welcome.

GDP growth has slowed over the past year and growth headwinds are rising. In the absence of additional monetary stimulus, employment and inflation would likely ease relative to our targets.

Global economic activity continues to weaken, easing demand for New Zealand’s goods and services. Heightened uncertainty and declining international trade have contributed to lower trading-partner growth. Central banks are easing monetary policy to support their economies. Global long-term interest rates have declined to historically low levels, consistent with low expected inflation and growth rates into the future.

In New Zealand, low interest rates and increased government spending will support a pick-up in demand over the coming year. Business investment is expected to rise given low interest rates and some ongoing capacity constraints. Increased construction activity also contributes to the pick-up in demand.

Our actions today demonstrate our ongoing commitment to ensure inflation increases to the mid-point of the target range, and employment remains around its maximum sustainable level.
Excerpts from the Summary Record of Meeting:

The Committee agreed that weak global economic conditions could see imported inflation remain low if global growth slows further or if commodity prices decline. The members discussed the range of appropriate policy responses should imported inflation persist at low levels.

The Committee welcomed the recent employment and wage data but noted that private sector wage growth was subdued despite businesses having difficulty finding labour. The members discussed that the recent slowdown in growth could dampen wage inflation by more than assumed. Some noted that if cost pressures remain elevated, firms may pass on costs to consumer prices by more than assumed, while others viewed the wage pass through as a natural consequence of a tight labour market and policy stimulus.

The members discussed the recent slower domestic GDP growth and the impact of slowing global demand on New Zealand through the trade, financial and confidence channels. The members noted that heightened global uncertainty was reducing investment and suppressing trading-partner growth. This highlighted the risk of a larger or more prolonged slowdown in global economic growth.

The Committee noted that additional stimulus from central banks had underpinned growth and reduced the likelihood of a more-pronounced slowdown. However, some thought that even with support from monetary stimulus, considerable economic and policy uncertainty could see global growth continue to decline. Other members noted that the easing in global financial conditions since the beginning of the year, or a shift in political environment, could lead to a pick-up in global growth over the next year.

The Committee acknowledged the importance of additional spending from households, businesses, and the government, to meet their inflation and employment targets. They also agreed that additional monetary stimulus was needed. The members discussed several important uncertainties.



RBNZ | Rida Husna | rida@tradingeconomics.com
8/7/2019 9:31:31 AM



New Zealand Money Last Previous Highest Lowest Unit
Interest Rate 1.00 1.50 67.32 1.00 percent [+]
Interbank Rate 1.25 1.55 24.25 1.25 percent [+]
Money Supply M0 6780.00 6771.00 213058.00 1081.00 NZD Million [+]
Money Supply M1 74553.00 73399.00 74553.00 1585.70 NZD Million [+]
Money Supply M3 318977.00 316000.00 318977.00 6726.00 NZD Million [+]
Foreign Exchange Reserves 27608.00 26928.00 32785.00 1029.50 NZD Million [+]
Banks Balance Sheet 563065.00 564752.00 564752.00 236047.00 NZD Million [+]
Deposit Interest Rate 1.05 1.09 16.32 1.02 percent [+]
Loans To Private Sector 116857.00 115793.00 116857.00 34958.00 NZD Million [+]
Central Bank Balance Sheet 27822.00 24911.00 36050.00 7116.00 NZD Million [+]


New Zealand Interest Rate

In New Zealand, interest rates decisions are taken by the Reserve Bank of New Zealand. The official interest rate is the Official Cash Rate (OCR). The OCR was introduced in March 1999 and is reviewed eight times a year by the Bank. The OCR influences the price of borrowing money in New Zealand and provides the Reserve Bank with a means of influencing the level of economic activity and inflation. This page provides - New Zealand Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news. New Zealand Interest Rate - actual data, historical chart and calendar of releases - was last updated on September of 2019.

Actual Previous Highest Lowest Dates Unit Frequency
1.00 1.50 67.32 1.00 1985 - 2019 percent Daily




Country Last Previous
Argentina 83.46 Sep/19
Turkey 16.50 Sep/19
Mexico 8.00 Aug/19
Russia 7.00 Sep/19
South Africa 6.50 Aug/19
Brazil 6.00 Aug/19
Indonesia 5.50 Aug/19
India 5.40 Aug/19
China 4.25 Sep/19
Saudi Arabia 2.50 Sep/19
United States 2.00 Sep/19
Canada 1.75 Sep/19
Singapore 1.74 Aug/19
South Korea 1.50 Aug/19
Australia 1.00 Sep/19
United Kingdom 0.75 Aug/19
Euro Area 0.00 Sep/19
France 0.00 Sep/19
Germany 0.00 Sep/19
Italy 0.00 Sep/19
Netherlands 0.00 Sep/19
Spain 0.00 Sep/19
Japan -0.10 Aug/19
Switzerland -0.75 Aug/19


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