Reserve Bank of New Zealand holds official cash rate steady at 5.50%

The committee observed that while the gross domestic product (GDP) growth in the June quarter outperformed expectations, the growth outlook remains limited. Monetary conditions in New Zealand are set to stay restrictive, causing a further decline in spending growth, the Committee said in a statement.

On the global front, economic growth is lagging, impacting New Zealand's trading partners. Core inflation rates have eased globally, albeit not as much as headline inflation. This is exerting downward pressure on New Zealand's export volumes and prices, with the exception of oil.

The Committee expressed concerns about near-term risks, particularly if economic activity and inflation do not slow as much as anticipated. Over the medium term, reduced global demand, especially from China, could further depress commodity prices and New Zealand's export revenue.

The Committee concluded that maintaining the OCR at 5.50 per cent is essential for steering annual consumer price inflation back to the target range of 1 to 3 per cent and supporting maximum sustainable employment.

ALCHEMPro News Desk (KD)