New Zealand central bank keeps rates on hold

Kiwi steady ahead of MPS

"We're still very much in the neutral stage where for the foreseeable future we don't see the OCR (official cash rate) increasing", said Wheeler, addressing his last monetary policy news conference before his five-year term ends next month.

CPI came into the middle of its 1% to 3% target band for the first time since 2011 in the first three months of the year, but fell to an annual 1.7% after the cost of fuel and airfare fell, with price growth flat in the second quarter. The bank maintained its forecast that rates won't rise until the third quarter of 2019, and lowered its projections for inflation. It slowed to 1.7 percent in the June quarter, and the RBNZ today predicted the rate will drop to 0.7 percent in the first quarter of 2018 - lower than it previously expected. In theory, the Reserve Bank should be able to use its Official Cash Rate and its forecasting ability to run the economy as fast as it can without generating inflation much faster than 2.0 percent. Treasury estimated past year the NAIRU was around 4.25 percent. Yet, it affirmed growth would pick up, thanks to growing population, elevated terms of trade and fiscal stimulus.

"We had a 70% decline in oil prices, we had a 75% decline in whole milk powder prices. The ability to forecast those is highly hard to say the least".

"But we also knew that monetary policy is enormously hard to calibrate - there's judgements about lags and transmission mechanisms. There are judgments about lags and transmission mechanisms so that is why we always refer to over the medium term and on average and those sorts of concepts".

The trade-weighted exchange rate has increased by almost 4% since May, partly in response to higher export prices.

More news: BBCI: Trump thanks Putin for ordering U.S. diplomatic staff be cut

Rates were raised four times, he reminded us.

The central bank said capacity pressures would gradually push non-tradables inflation higher and reiterated the risk of house prices rising again. New Zealand's terms of trade were at a 40-year high, oil prices were over US$100 a barrel, whole milk powder prices very high, the market was pricing in OCR tightening and the International Monetary Fund was forecasting a positive output gap (as was the RBNZ).

"In the current environment, if a central bank is not very upset about currency appreciation, it's a green light to go further".

So I think the test is: do you make appropriate decisions based on information you have available at the time and then, if that information changes on you, do you then make appropriate decisions to modify your views. With the benefit of hindsight, did the bank tighten too quickly then?

He has had a low-key approach to the job during his five years but was criticised by some commentators for the abortive rate rises in 2014 which had to be reversed as inflation fell to multi-year lows, and for giving what were interpreted as mixed signals and jumbled communications. It's not the whole story - far from it, there's an very bad lot of other things happening. "So if you ask 'were those tests met?', I am comfortable that the bank meets those tests".

Related News:



Most liked

Bank of England says animal fat will stay in banknotes
The bank says it will continue to issue polymer notes that contain tallow, a rendered form of animal fat. The Bank made the decision despite 88% of respondents being against the use of animal-derived additives.

Scientists Hit Breakthrough In Quest To Transplant Pig Organs Into Humans
Next, the company needs to make sure it can consistently replicate virus-free pigs, which it's already well on its way to doing. Alternatively, human cells populating the germline of an animal could enable human genes to pass onto offspring.

US missile shield not certain to protect Guam from North Korea
ENERGY: Benchmark U.S. crude added 1 cent to $49.18 per barrel in electronic trading on the New York Mercantile Exchange. The 30-year Treasury bond rose 27/32 in price to yield 2.8252 per cent, from 2.867 per cent late on Tuesday.

Rig crashes, spills frozen pizzas on I-30, halts traffic for hours
Officials shut down the highway in both directions, keeping one carriageway closed for four hours while crews picked up the pizzas.

Would-be armed robbers foiled by Texas store owner and son
Eventually, the crook breaks free and runs out of the store without his loaded gun, merchandise, or money. Commenting on the incident, police said: 'We do not recommend that you try and fight off armed robbers.

Rihanna's Embracing Her Curves, and Why You Should Too
The source said: "Rih has been through hell and back and she deserves better". Meanwhile, Rihanna is now dating Saudi billionaire Hassan Jameel.

Blac Chyna Rubs Her Belly & Shows The "Power Of P***y"
Rob and Blac Chyna moved very quickly through their relationship getting engaged and having a baby within a year of dating. Belly explores the power of the female form in the video for his latest Glorious single, " P.O.P ".

You Need To Know Hold Recommendation for: Barrick Gold Corporation (ABX)
Rothschild Asset Management Inc. boosted its position in shares of Barrick Gold Corporation by 12.2% in the second quarter. A number of hedge funds and other institutional investors have recently made changes to their positions in the company.

Benchmark sues former Uber CEO Travis Kalanick
The complaint, which was filed in DE court, accuses Kalanick of "fraud, breach of contract and breach of fiduciary duty". If successful, the Benchmark lawsuit could kick Kalanick off the board of directors, making his return impossible.

US stocks slip amid heightened US-North Korea tensions
The U.S. seized Guam from Spain in 1898 to provide a fueling station for the U.S. fleet in the western Pacific. Macy's was down 4.4 percent after the company said its sales continued to decline in the second quarter.

Percent Would Support Postponing the 2020 Election
Any Republican who is not supporting this president with no questions asked is going to find themselves drummed out of the party. Quick with a caveat, the pair noted that their survey "is only measuring reactions to a hypothetical situation".

Buhari's supporters take to the streets
President Muhammadu Buhari has been away for more than 90 days on a medical trip to London for an undisclosed illness. The group, like the former, was seen being given adequate police protection.

Tube Getting Full 4G Phone Coverage Within 2 Years
There is Wi-Fi in a large number of tube stations, but not on the trains themselves, which leads to travellers being nearly completely cut off while in transit.

Britney Spears Terrified as Man Jumps On Vegas Stage
A scary situation unfolded during one of Britney Spear's recent concerts when a man bum-rushed the stage during her performance. Spears was not immediately aware of the chaos behind her and continued performing until she noticed the commotion.

Landrieu warns of flood risk after pumping station loses power supply
As long as the power supply from Entergy remains steady, the system will be able to handle a "typical rainfall", Landrieu said. But if that goes down, he is unsure what will happen next, per The Times-Picayune . "It's killing my business".