Majority of the Shadow Board members recommend keeping the OCR on hold in May

There is a split of views amongst the NZIER Monetary Shadow Board regarding the Official Cash Rate (OCR) at the upcoming May Monetary Policy Statement. The majority of Shadow Board members recommend the Reserve Bank of New Zealand (RBNZ) keep the OCR at 2.25 percent. They viewed that subdued growth and spare capacity in the New Zealand economy, along with the ongoing uncertainty over the impacts of the US-Israel war with Iran, justify keeping the OCR on hold in May. However, three members considered that the central bank should commence its tightening cycle with a small OCR increase now, given that the real interest rate has remained low for a prolonged period, which is adding to inflation pressures.