WELLINGTON, Sept. 28 (Xinhua) -- New Zealand Reserve Bank on Thursday left the Official Cash Rate (OCR) unchanged at 1.75 percent.
Reserve Bank Acting Governor Grant Spencer said in a statement that global economic growth has continued to improve in recent quarters, but inflation and wage outcomes remain subdued across the advanced economies and challenges remain with on-going surplus capacity.
Bond yields are low, credit spreads have narrowed and equity prices are near record levels, Spencer said, adding that monetary policy is expected to remain stimulatory in the advanced economies, but less so going forward.
The trade-weighted exchange rate has eased slightly since the August statement, and a lower New Zealand dollar would help to increase tradables inflation and deliver more balanced growth, Spencer said.
GDP in the June quarter grew in line with expectations, following relative weakness in the previous two quarters, he said, adding that while exports recovered, construction was weaker than expected.
Growth is projected to maintain its current pace going forward, supported by accommodative monetary policy, population growth, elevated terms of trade, and fiscal stimulus, he said.
House price inflation continues to moderate due to loan-to-value ratio restrictions, affordability constraints, and a tightening in credit conditions, Spencer said, adding that this moderation is expected to continue, although there remains a risk of resurgence in prices given population growth and resource constraints in the construction sector.
Annual CPI inflation eased in the June quarter, but remains within the target range, he said, adding that monetary policy will remain accommodative for a considerable period, and numerous uncertainties remain and policy may need to adjust accordingly.
