Reserve Bank of New Zealand ‘shadow board’ monetary policy preview – suggests on hold

The RBNZ monetary policy meeting is this week, the consensus expectation is for an on hold cash rate decision.

The statement is due on Wednesday 16 August 2023 at 0200 GMT. which is 9pm US Eastern time on Tuesday, 15 August 2023.

From the New Zealand Institute of Economic Research (NZIER) report:

  • Most Shadow Board members recommend that the Reserve Bank keep the Official Cash Rate (OCR) at 5.50 percent in the upcoming August Monetary Policy Statement.
  • The impacts of previous interest rate increases are still flowing through to the household sector, which should help to reduce inflation pressures in the New Zealand economy. However, two members recommended a 25 basis-point increase in the OCR in August. They were concerned about the stickiness of domestic inflation pressures and the continued increase in employment, which seems to suggest more work now is needed for the Reserve Bank to sufficiently bring inflation down.

The Reserve Bank of New Zealand ‘shadow board’ is put together by the NZIER (the New Zealand Institute of Economic Research)

  • Its Monetary Policy Shadow Board is independent of the Reserve Bank of New Zealand
  • the shadows do not represent what the RBNZ is going to do but rather what their view is that the RBNZ should do. That is, the Shadows do not preview what they think will happen, but what they think should happen.
  • The Shadow Board aims to: encourage informed debate on each interest rate decision help inform how a Board structure might operate explore how Board members could use probabilities to express uncertainty

This article was written by Eamonn Sheridan at Source