RBNZ raised the Official Cash Rate to by 25bps to 0.75% as expected. It also maintained a hawkish bias, noting that ” further removal of monetary policy stimulus is expected over time given the medium term outlook for inflation and employment.”
The central bank also said that despite recent nationwide lockdown, “underlying economic strength remains supported by aggregate household and business balance sheet strength, fiscal policy support, and strong export returns.” Capacity pressured have “continued to tighten” with employment “above its sustainable level”. A broad range of economic indicators highlight the economy “continues to perform above its current level”.
Headline CPI is expected to be “above 5 percent in the near term” before returning towards 2% midpoint “over the next two years.
