(RTTNews) - New Zealand's central bank decided to hold the benchmark interest rate unchanged and to keep the policy at a restrictive level for longer.
The Monetary Policy Committee of the Reserve Bank of New Zealand, led by Governor Adrian Orr, maintained the Official Cash Rate at 5.50 percent.
The Reserve Bank has started the current tightening cycle in October 2021, when the OCR was 0.25 percent.
Policymakers agreed that interest rates will need to remain at a restrictive level for longer, to ensure that inflation returns to the 1-3 percent target and to support maximum sustainable employment.
At the meeting, members discussed the possibility of the need for increases to the OCR. They viewed that the policy remains restrictive and it would be appropriate to wait for further data to observe the speed and extent of easing in capacity pressures in the economy.
"If inflationary pressures were to be stronger than anticipated, the OCR would likely need to increase further," the bank said.
The committee expects inflation to fall within the target band by the second half of 2024. Labor market pressures are easing, although employment remains above its maximum sustainable level.
Although the bank signalled that it would hike rates further, the tightening cycle is now over and the bank's next move will be a rate cut in the second half of next year, Capital Economics' economist Marcel Thieliant said.
