Reserve Bank maintains official cash rate at 5.5 per cent

Reserve Bank of New Zealand Office and OCR text

Photo: RNZ

The Reserve Bank has kept the official cash rate at 5.5 per cent.

The Reserve Bank has kept the official cash rate unchanged at 5.5 per cent for the seventh consecutive meeting.

The central bank said the economy had slowed, unemployment was rising and it acknowledged household budgets were under pressure.

“While weaker capacity pressures and labor market easing are reducing domestic inflation, this decline is tempered by sectors of the economy that are less sensitive to interest rates,” the monetary policy committee said in a statement.

“These short-term factors include, for example, higher house rents, insurance costs, council rates and other domestic service inflation prices. A slow decline in domestic inflation represents a risk to inflation expectations.”

He said annual consumer price inflation remained above the target band of 1 to 3 percent, and monetary policy needed to remain restrictive to ensure inflation returned to target within a reasonable time frame.

A series of forecasts issued with the statement showed the OCR would remain at 5.5 percent until the end of 2025.