The Reserve Bank of New Zealand raised the cash rate from 1.5% to 2.0%. As expected.
Eyes now turn to the statement to assess what is likely to come in the months ahead.
From the statement:
- On balance, a broad range of indicators highlight that productive capacity constraints and ongoing inflation pressures remain prevalent. Employment remains above its maximum sustainable level, with labour shortages now the major constraint on production. The Reserve Bank’s core inflation measures are above 3 percent.
- The Committee agreed to continue to lift the OCR at pace to a level that will confidently bring consumer price inflation to within the target range. The Committee viewed the projected path of the OCR as consistent with achieving its primary inflation and employment objectives without causing unnecessary instability in output, interest rates and the exchange rate. Once aggregate supply and demand are more in balance, the OCR can then return to a lower, more neutral, level.
Reminder, Reserve Bank of New Zealand Governor Orr follows up with this press confernce at 0300 GMT
May statement projects a higher cash rate to come still:
- In September 2022, the RBNZ expects the official cash rate to be 2.68% (previous 1.89%).
- By June 2023, the RBNZ expects the official cash rate to be 3.88% (previous 2.84%).
- In September 2023, the RBNZ expects the official cash rate to be 3.95% (previous 3.1%).
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