New Zealand eases level of monetary policy restraint

WELLINGTON, Aug. 14 (Xinhua) — The New Zealand central bank eased the level of monetary policy restraint by reducing the official cash rate (OCR) by 25 basis points to 5.25 percent on Wednesday due to eased inflation.
New Zealand’s annual consumer price inflation is returning to within the Monetary Policy Committee’s (MPC) 1 to 3 percent target band, said a statement of the Reserve Bank of New Zealand (RBNZ).
“Surveyed inflation expectations, firms’ pricing behavior, headline inflation, and a variety of core inflation measures are moving consistent with low and stable inflation,” it said.
Economic growth remains below trend, inflation is declining across advanced economies, and some central banks have begun reducing policy interest rates, RBNZ said.
Consumer price inflation in New Zealand is expected to remain near the target mid-point over the foreseeable future, it said.
The pace of further easing of the monetary policy restraint will depend on the MPC’s confidence that pricing behavior remains consistent with a low inflation environment, and that inflation expectations are anchored around the 2 percent target, the statement said.
Immediately following Wednesday’s OCR cut, New Zealand’s major retail banks cut their mortgage rates.
The OCR started to increase in late 2021 in response to New Zealand’s high inflation, to the current peak of 5.5 percent in May last year. However, recent statistics show stalling economic growth, with slowing inflation and rising unemployment. ■