Banks tip stronger GDP as RBNZ stays data‑dependent
Reserve Bank (RBNZ) governor Anna Breman has used a series of media interviews to endorse the central bank’s November Monetary Policy Statement (MPS) and signal the official cash rate (OCR) is likely to remain on hold at 2.25% for some time if the economy evolves as expected.
Although Breman was not involved in preparing the November MPS, or its post‑release communications, the bank said the statement was being released “to enable equitable access to information” as the new governor speaks publicly about the outlook this week.
Growth seen recovering, inflation still on track to target
Breman, who commenced her five-year term on 1 December, said the November MPS provides a clear and comprehensive guide to the Monetary Policy Committee’s (MPC) thinking.
“The November MPS contains a thorough and clearly presented discussion of the Monetary Policy Committee’s (MPC) assessment of economic conditions and the inflation outlook,” she said.
Breman also noted that the policy decision and “the balance of risks to the outlook are well articulated in the MPC’s summary record of meeting.”
“One of my priorities as governor is to promote understanding of our role and decisions," she said. "This is especially important at this time given that I have only recently joined the MPC and assessed recent data.”
Since the November MPS, the data have been broadly in line with the bank’s projections.
“We continue to see signs that growth is recovering after having stalled in the middle of this year," Breman said. "The labour market is still weak but is expected to recover as demand in the economy strengthens. We remain confident that annual headline consumers price index inflation will decline towards the 2% target mid-point by the middle of next year.”
Recent bank forecasts also point to stronger‑than‑expected September‑quarter GDP, with ASB and Westpac now estimating growth of around 0.8–0.9% – roughly double the RBNZ’s November pick – as construction, manufacturing, and discretionary services show tentative signs of recovery.
OCR path: slight chance of another cut, but hold more likely
Breman reiterated that the OCR track published in the November MPS still implies only a small chance of further easing.
“The forward path for the OCR published in the November MPS indicates a slight probability of another rate cut in the near term,” she said. “However, if economic conditions evolve as expected the OCR is likely to remain at its current level of 2.25% for some time.”
Breman also highlighted recent moves in wholesale markets.
“Financial market conditions have tightened since the November decision, beyond what is implied by our central projection for the OCR,” she said. “As always, we are closely monitoring wholesale market interest rates and their effect on households and businesses.”
Ahead of the next OCR decision in February, the MPC will keep assessing “incoming data, financial conditions, and global developments, and implications for New Zealand’s economic outlook and our medium-term inflation objective.”
‘Monetary policy is not on a preset course’
Breman stressed that RBNZ will remain data‑dependent rather than locking in a fixed policy path.
She reiterated that monetary policy “is not on a preset course. This is why the MPC meets seven times a year to assess the latest economic conditions and forecasts.”
The governor is undertaking a round of media appearances, including interviews with 1 News, RNZ, and the New Zealand Herald, as she seeks to build public understanding of how the MPC views the economy and how it will respond to future inflation and growth developments, RBNZ reported.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
