NZIER Shadow Board recommends the Reserve Bank keep the OCR at 5.50 percent in July

July 8, 2024

New Zealand Institute of Economic Research (Inc)
Media Release, 10 am Monday, 8 July 2024

For immediate release

Most Shadow Board members recommended that the Reserve Bank of New Zealand (RBNZ) keep the Official Cash Rate (OCR) at 5.50 percent in the upcoming Monetary Policy Review on 10 July 2024. The weaker growth and a slack labour market, along with the continued easing in annual CPI inflation, suggest that the OCR increases to date are reducing inflation pressures in the New Zealand economy. However, with domestic inflation pressures remaining elevated, Shadow Board members were of the view that the RBNZ should remain cautious about moving the OCR for now. One member considered that there is justification for a cut in the OCR given the deteriorating economic outlook.

Regarding where the OCR should be in a year’s time, the Shadow Board’s core view was an easing in the OCR, with the majority picking an OCR ranging between 4.25 percent and 5.25 percent. This reflects the broad consensus that the cooling economy and continued easing in inflation pressures should provide scope for the RBNZ to commence an easing cycle in the OCR next year. Several members considered that the pressure for the RBNZ to start lowering the OCR early next year is increasing, given the weak economic momentum. However, one member recommended that the RBNZ wait for further data to see how the upside and downside risks play out.    


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About the NZIER Monetary Policy Shadow Board

NZIER’s Monetary Policy Shadow Board is independent of the Reserve Bank of New Zealand. Individuals’ views are their own, not those of their respective organisations. The next Shadow Board release will be Monday, 12 August 2024, ahead of the RBNZ’s Monetary Policy Statement. Past releases are available from the NZIER website:     

Shadow Board participants put a percentage preference on each policy action. Combined, the average of these preferences forms a Shadow Board view ahead of each monetary policy decision. 

The NZIER Monetary Policy Shadow Board aims to:
•    encourage informed debate on each interest rate decision 
•    help inform how a Board structure might operate 
•    explore how Board members could use probabilities to express uncertainty.

For further information, please contact:
Ting Huang, Senior Economist, 027 266 0969

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