NZIER recommends no change to RNBZ cash rate

Christina Leung, Principal Economist at the New Zealand Institute of Economic Research (NZIER) was out with their Monetary Policy Shadow Board’s recommendation on the upcoming Reserve Bank of New Zealand’s (RBNZ) monetary policy decision.

Key Quotes:

"There is a slightly more divergent view amongst the Shadow Board members relative to the previous round, but the recommendation remains firmly centered on no change to the OCR. Higher global interest rates support a tightening bias, but the heightened uncertainty and low inflation environment indicates little urgency for interest rates to be lifted."

Uncertainty over the effects of new government policies … continues to weigh on business confidence.

Firms are seeing.... demand in their own business … continues to hold up at healthy levels.

Nonetheless, this uncertainty may impact on firms' planning over the longer run, and adds to the case for the Reserve Bank to be cautious as to when it lifts interest rates.”