PHOTO: The Reserve Bank of New Zealand (RBNZ). FILE
The Reserve Bank of New Zealand (RBNZ) has once again maintained its current interest rates during its fourth consecutive meeting. However, the central bank has reiterated its concern about the need for a potentially prolonged period of tighter monetary policy to curb inflation.
In the conclusion of its monetary policy review meeting held on Wednesday, the RBNZ announced that the official cash rate would remain at 5.5 percent. The Monetary Policy Committee (MPC) of the RBNZ stated, “Interest rates are being held steady to limit economic activity and to counter inflationary pressures, as necessary. While the economy exhibited stronger-than-expected GDP growth in the June quarter, the overall economic outlook remains subdued. Given the continued restrictive monetary conditions, spending growth is anticipated to decline further. The New Zealand economy is gradually rebalancing supply and demand, but sustained sluggishness in economic activity is essential to alleviate inflationary pressures.”
One potential factor that may influence the RBNZ’s upcoming rate decision in November is the stabilization of the housing market, according to Daniel Clouston, the CEO of the real estate firm Ray White New Zealand. Recent data from CoreLogic indicated that property values remained flat in September, with the national average hovering just above $900,000.
Clouston remarked, “If the housing market recovery gains momentum, it could significantly impact the RBNZ’s decision-making process during their next review scheduled for November 29.” However, the MPC emphasized that house prices remained within sustainable levels.
The MPC also highlighted ongoing financial tightening, citing increases in wholesale and retail lending rates. Committee members observed that average mortgage rates on outstanding loans continued to rise, and the share of income devoted to servicing debt was still increasing. Additionally, they noted a slight uptick in house prices, although this was attributed to low sales volumes.