The Reserve Bank has announced today there will be no change to the Official Cash Rate at 1.75 percent, and are still expecting to keep it at this level through until 2020.
While the consumer price inflation remains below the target mid-point of 2 percent the current supportive monetary policy will continue.
The Bank is expecting low interest rates and government spending to encourage GDP growth throughout 2019.
"Low interest rates, and continued employment growth, should support household spending and business investment. Government spending on infrastructure and housing also supports domestic demand," said Reserve Bank Governor Adrian Orr.
"As capacity pressures build, consumer price inflation is expected to rise to around the mid-point of our target range at 2 percent.
There are upside and downside risks to this outlook. A more pronounced global downturn could weigh on domestic demand, but inflation could rise faster if firms pass on cost increases to prices to a greater extent."
In order to maintain low, stable inflation and to encourage sustainable employment, the Bank intends to keep the OCR at this expansionary level for some time.
The key points from today's Monetary Policy Statement are:
- Low interest rates are needed to support economic growth and inflation
- Tailwinds from a strong global economy are easing
- Economic growth is supporting job creation
- Inflation remains below the target mid-point
For a clear, easy to read summary, check out the RBNZ's Monetary Policy Statement in Pictures.
You can also read more from the RBNZ on today's OCR announcement here.