Reserve Bank of New Zealand (RBNZ) leaves rates unchanged, as expected ...Middle East

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Reserve Bank of New Zealand (RBNZ) leaves rates unchanged, as expected

Reserve Bank of New Zealand

If medium-term inflation pressures continue to ease as projected, thecommittee expects to lower the official cash rate furtheAnnual consumers price inflation will likely increase towards the top of themonetary Policy Committee’s 1 to 3 percent target band over mid-2025.The economic outlook remains highly uncertainHowever, with spare productive capacity in the economy and declining domestic inflationpressures, headline inflation is expected to remain in the band and return toaround 2 percent by early 2026Further data on the speed ofNew Zealand’s economic recovery, the persistence of inflation, and the impactsof tariffs will influence the future path of the official cash rateHeightened global policy uncertainty Andtariffs are expected to reduce global economic growthThis will likely slow the pace of New Zealand’s economic recovery, reducing inflation pressures

RBNZ minutes:

    Committee expects to lower the official cash rate further, broadly consistent with the projection outlined in MayCase for keeping the OCR on hold at this meeting highlighted the elevated level of uncertainty, and the benefits of waiting until August in light of near-term inflation risksCommittee discussed the options of cutting the OCR by 25 basis points to 3 percent or keeping the OCR on hold at 3.25 percent at this meetingGlobal growth is expected to slow over the second half of 2025, reflecting the uncertain consequences of trade protectionismSome members emphasised that further monetary easing in July would provide a guardrail to ensure the recovery of economic activityDomestic financial conditions are evolving broadly as expected.Risks to the global outlook remain elevatedRecently announced tariffs could result in higher or lower medium-term inflation pressure for New Zealand than assumed in the central scenario

    There is no press conference after this meeting.

    This article was written by Eamonn Sheridan at www.forexlive.com.

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