Reserve Bank of New Zealand Governor Breman said the economic outlook has evolved broadly in line with the Monetary Policy Committee’s expectations, with signs continuing to emerge that growth is recovering.
Breman reiterated that the forward track for the Official Cash Rate (OCR), as published in the November Monetary Policy Statement, still implies a small probability of a further rate cut in the near term. However, she emphasised that if economic conditions unfold as expected, the OCR is likely to remain at its current level of 2.25% for an extended period.
Breman also noted that financial market conditions have tightened since the November policy decision, to a greater degree than implied by the RBNZ’s central OCR projection. She said this tightening would be factored into the bank’s ongoing assessment of monetary conditions and the outlook for growth and inflation.
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