RBNZ Minutes: OCR left unchanged in light of the current level 4 lockdown and health uncertainty

The Reserve Bank of New Zealand (RBNZ) published the minutes of its August monetary policy decision, in which the central bank kept the OCR on hold amid fresh covid lockdown n the country.

Key takeaways

In light of the current level 4 lockdown and health uncertainty, the committee agreed to leave the OCR unchanged at this meeting.

Committee agreed that their least regrets policy stance is to further reduce monetary policy stimulus.

Committee discussed the merits of an increase in the OCR at this meeting and considered the implications of alternative sequencing of OCR changes over time.

Members now had more confidence that rising capacity pressures will feed through into inflation, and that employment is at its maximum sustainable level.

Members concluded that they could continue removing monetary stimulus, following their decision to halt additional purchases of government bonds under the LSAP programme at their July meeting.

Committee reiterated that the OCR is currently the preferred tool to adjust the level of stimulus in the economy.

Committee noted that a number of factors are expected to weigh on house prices over the medium term.

Members expressed uncertainty about how quickly momentum in the housing market will recede.

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