The Reserve Bank has announced this morning that the Official Cash Rate (OCR) will remain at 1.75 percent for now.
"However, we are well positioned to manage change in either direction — up or down — as necessary," said Reserve Bank Governor Adrian Orr.
While the general economic outlook has not changed much since the May Monetary Policy Statement, and that consumer price inflation remains below the 2 percent mid-point of the Bank's target, the Governor did indicate that CPI inflation is likely to increase in the near term due to higher fuel prices. "Beyond that, inflation is expected to gradually rise to our 2 percent annual target, resulting from capacity pressures", he said.
Also on the domestic front, while spending and investment by both households and government is expected to support growth, the Governor said "recent weaker GDP outturn implies marginally more spare capacity in the ecnonomy than we anticipated. The Government's projected spending impluse is also slightly lower and later than anticipated".
"The best contribution we can make to maximising sustainable employment, and maintaining low and stable inflation, is to ensure the OCR is at an expansionary level for a considerable period".
Read the full OCR statement on the Reserve Bank website.