Shadow Board recommends the OCR should remain at 5.5 percent in August

August 14, 2023

Most Shadow Board members recommend that the Reserve Bank keep the Official Cash Rate (OCR) at 5.50 percent in the upcoming August Monetary Policy Statement. The impacts of previous interest rate increases are still flowing through to the household sector, which should help to reduce inflation pressures in the New Zealand economy. However, two members recommended a 25 basis-point increase in the OCR in August. They were concerned about the stickiness of domestic inflation pressures and the continued increase in employment, which seems to suggest more work now is needed for the Reserve Bank to sufficiently bring inflation down.

Regarding where the OCR should be in a year, the Shadow Board’s core view ranged from 4.50 percent to 5.75 percent and centred on an OCR of 5.25 percent. While most members did not see the need for the Reserve Bank to increase the OCR in the August meeting, there were increased concerns over the potential upside risks from strong migration, potential pick-up in the housing market and continued strong growth in employment. It remains crucial for the Reserve Bank to closely monitor the impact of previous OCR increases and risks to inflation pressures in the New Zealand economy.

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, 2 October 2023, ahead of the RBNZ’s Monetary Policy Review. 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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