NZIER reacts to RBNZ March Monetary Policy Statement, media release - March 2016
10 March 2016
Reserve Bank surprises us with a 25bp cut to OCR
We expected the OCR to remain on hold across 2016. Today the Reserve Bank proved us wrong – it cut the OCR by 25 basis points.
The Reserve Bank’s cut to 2.25% was based on a deteriorating global outlook, a higher than expected Kiwi dollar and lower inflation expectations.
Our own view was centred on two key factors: our forecasts of continued momentum in the New Zealand economy pointing to economic growth of 2.5 to 3.0% for the next few years; and the weight we attached to the Reserve Bank’s view on financial stability risks from asset prices and the Auckland housing market in particular.
In hindsight we took too much from Governor Wheeler’s speech in February that highlighted the many factors besides consumer price inflation, including asset prices, the Reserve Bank is required to take into account under its Policy Targets Agreement.
The full media release can be read here.Go Back