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New Zealand leaves interest rates at record low

AFP logoAFP 9/02/2017
New Zealand's central bank left its base rate at a record low of 1.75 percent and indicated it would stay there "for a considerable period", barring any global shocks © Provided by AFP New Zealand's central bank left its base rate at a record low of 1.75 percent and indicated it would stay there "for a considerable period", barring any global shocks

New Zealand's central bank left its base rate at a record low of 1.75 percent Thursday and indicated it would stay there "for a considerable period", barring any global shocks.

The South Pacific nation's inflation rate hit the Reserve Bank's 1.0-3.0 percent target for the first time in two years during the final quarter of 2016 and governor Graeme Wheeler said the economic outlook was positive.

While he had concerns about increased geo-political uncertainty and the stubbornly high New Zealand dollar, Wheeler saw no need for an imminent rate move.

"Longer-term inflation expectations remain well-anchored at around two percent," he said. "Monetary policy will remain accommodative for a considerable period.

"Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly."

The bank's hands-off approach was widely anticipated and NAB economist David de Garis said Wheeler's dovish tone had reduced expectations of a rate rise any time soon.

"This morning’s RBNZ OCR (official cash rate) track has it steady not only through this year and next and not hiking until 2019," he said in a note to clients.

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