RBNZ’s Breman Expects To Hold Cash Rate At 2.25% For Some Time

New Zealand's central bank expects to maintain the Official Cash Rate at current levels for some time if economic conditions evolve as expected, Governor Anna Breman said. The kiwi dollar fell.

"The forward path for the OCR published in the November MPS indicates a slight probability of another rate cut in the near term," Breman said in a statement Monday in Wellington. "However, if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25% for some time."

The Reserve Bank signaled last month it had likely finished cutting interest rates after 325 basis points of easing. Financial markets have since begun to price a rate hike from the third quarter next year and Westpac Banking Corp. last week raised some home-loan interest rates.

"Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR," Breman said.

New Zealand's dollar fell after the statement, buying 57.8 US cents at 3:20 p.m. in Wellington from 58.08 cents.

Breman said the economy is evolving "broadly in line" with the RBNZ's expectations, and the central bank is confident that inflation will reach the 2% target by mid-2026.

Economists expect gross domestic product grew 0.8% in the third quarter, twice the pace the RBNZ projected in the November statement. The GDP report is due Dec. 18.

Source: Bloomberg Europe