leave the official cash rate at 0.25 per cent, while it takes time to “pause” and “observe” the outcomes of the next few days and weeks. The bank noted that the decision was reached “in the context of the Government’s imposition of level 4 COVID restrictions across New Zealand”.
The move was endorsed by the opposition, with National Party shadow treasurer Andrew Bayl saying it was the correct decision for now to hold the OCR. “The bank has done the right thing, having clearly recognised that it would be a mistake to put further pressure on the economy while we deal with the lockdown,” he said. “That said, there are still strong signals that rapid rate rises are on the horizon, which means the Government must work with the bank, rather than against it, to manage this prudently.”
According to recent forecasts issued by the Reserve Bank, the OCR is expected to be raised to 1 per cent in the first half of next year, and will be maintained at around 2 per cent in 2023 and 2024.Nevertheless, the central bank Governor expressed his confidence in the current state of the country “to continue to grow and prosper”, while managing through the global health crisis. “We see the country being in a very good position to maintain economic momentum for a long period of ongoing disruptions,” he said.
