RBNZ Keeps Interest Rate Steady as Inflation Remains Relentless

crypthub

about 8 hours ago

Decision Outlook

The Reserve Bank of New Zealand is set to keep the official cash rate at 5.50% for the second meeting in a row. Economists and swap markets see a 95% chance of no change as the committee weighs slowing growth and rising unemployment. Since October 2021 the RBNZ has tightened by 525 basis points, and policy lags remain significant.

Inflation and Economic Balance

Headline inflation sits at 3.4% in Q4 2024, above the 1‑3% target band, while core non‑tradable prices linger near 5.8% due to housing costs, wages and insurance. GDP growth slowed to 0.2% and the unemployment rate rose to 4.3%, the highest in three years. Persistent domestic price pressures force the bank to maintain a restrictive stance despite weaker activity.

Market and Global Context

The NZD has risen 2.3% against the US dollar this year and 10‑year bond yields hit 4.8% as markets price extended tight policy. International peers such as the Fed and BoE are holding rates, but many project cuts in 2025, unlike the RBNZ which is likely to wait until late 2025 or early 2026. The decision will signal any shift in forward guidance and affect mortgage rates, construction, and export‑oriented sectors.