Reserve Bank of New Zealand leaves cash rate on hold at 5.5%, as widely expected

Reserve Bank of New Zealand

The Bank sees the cash rate ahead at:

  • 5.61% in September 2024 (prior 5.6%)
  • 5.54% in June 2025 (prior 5.33%)
  • 5.4% in September 2025 (prior 5.15%)
  • 2.99% in June 2027

That 5.4% in September 2025 is a full 25bp higher than its previous forecast.

Forecasts inflation at 2.6% y/y by June 2025.


  • Monetary policy needs to be restricted
  • Restrictive monetary
    policy has reduced capacity pressures in the New Zealand economy and
    lowered consumer price inflation
  • Annual consumer
    price inflation is expected to return to within the committee’s 1 to
    3 percent target range by the end of 2024.
  • Welcome decline in
    inflation in part reflects lower inflation for goods and services
    imported into New Zealand
  • Components of
    domestic services inflation persists
  • Wage growth and
    domestic spending are easing
  • Weaker capacity
    pressures and an easing labour market are reducing domestic inflation


  • Members agreed they remain confident that monetary policy is
    restricting demand
  • A further decline in
    capacity pressure is expected, supporting a continued decline in
  • Committee agreed
    that interest rates need to remain at a restrictive level for a
    sustained period to ensure annual headline cpi inflation returns to
    the 1 to 3 percent target range
  • Committee noted that
    annual headline cpi inflation was expected to return to the target
    band in the december quarter of this year
  • Domestic inflation
    has fallen more slowly than expected and headline consumers price
    index (cpi) inflation remains above the committee’s target band
  • Committee also
    agreed that interest rates may have to remain at a restrictive level
    for longer than anticipated in the february monetary policy statement
    to ensure the inflation target is met
  • The committee
    discussed the possibility of increasing the ocr at this meeting

A more hawkish RBNZ, not only suggesting later rate cuts but even a possibility of another hike.

RBNZ Governor Orr will hold his press conference in an hour.

Background to this:

And, what’s still to come this week from the Bank:

Old photo, some of these officials have moved on

This article was written by Eamonn Sheridan at Source