PHOTO: The Reserve Bank Of New Zealand
New Zealand’s annual consumer price inflation is returning to within the Monetary Policy Committee’s 1 to 3 percent target band. Surveyed inflation expectations, firms’ pricing behavior, headline inflation, and various core inflation measures are aligning with low and stable inflation.
Economic growth remains below trend, and inflation is declining across advanced economies. Some central banks have begun reducing policy interest rates. Imported inflation into New Zealand has declined to levels more consistent with pre-pandemic norms.
Services inflation remains elevated but is expected to continue declining both domestically and internationally, in line with increased spare economic capacity. Consumer price inflation in New Zealand is projected to stay near the target mid-point in the foreseeable future.
The Committee has decided to ease monetary policy restraint by reducing the OCR to 5.25 percent. The pace of further easing will depend on the Committee’s confidence that pricing behavior remains consistent with a low inflation environment and that inflation expectations are anchored around the 2 percent target.
SOURCE: RBNZ