Breaking: RBNZ hikes OCR by 25bps to 0.50%, NZD/USD jumps
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At its October monetary policy meeting, the Reserve Bank of New Zealand (RBNZ) board members decided to raise the Official Cash Rate (OCR) from a record low of 0.25% to 0.50%, as widely expected.
RBNZ announces its first-rate lift-off since the pandemic began in March 2020.
Markets had priced in an 80% probability of a rate hike this week, given August’s hawkish hold.
Key takeaways from the minutes of the policy meeting
Committee noted that further removal of monetary policy stimulus is expected over time.
Future moves contingent on the medium-term outlook for inflation and employment.
Policy stimulus will need to be reduced to maintain price stability and maximum sustainable employment over the medium term.
Demand shortfalls are less of an issue than the economy hitting capacity constraints
Number of factors are expected to constrain house prices over the medium term.
Committee will be watching closely how the economy adjusts to the ongoing disruption from endemic COVID-19.
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