RBNZ retains view of robust economy in face of rate cuts
The central bank anticipates gross domestic product will grow at an annual pace of about 3% over the next two years.
The Reserve Bank kept its forecast for robust economic activity in New Zealand, even as dwindling expectations on inflation forced an interest rate cut.
The central bank anticipates gross domestic product will grow at an annual pace of about 3% over the next two years, raising its forecast for 2016 and 2017 and trimming its outlook for 2018.
Unemployment is seen dropping below 5% in 2018, with the bank slicing about half a percentage point from its forecast joblessness.
The government's operating balance is predicted to be flat in 2016 with surpluses in out-years, and the current account deficit is predicted to be smaller than previously thought.
"Domestically, the dairy sector faces difficult challenges, but domestic growth is expected to be supported by strong inward migration, tourism, a pipeline of construction activity, and accommodative monetary policy," governor Graeme Wheeler says..
Mr Wheeler today cut the official cash rate a quarter point to a record low 2.25%, and hinted at more reductions, to try and stave off dwindling expectations on the inflation outlook as globally cheap oil and a persistently strong kiwi dollar keep a lid on imported prices.
The bank says its recent revisions to forecast GDP suggests the slowing momentum at the start of last year was more pronounced than earlier thought, with lower consumption and business investment through 2015.
(BusinessDesk)
Paul McBeth
Thu, 10 Mar 2016
Thu, 10 Mar 2016
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RBNZ retains view of robust economy in face of rate cuts
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