Business Maverick: New Zealand Holds Interest Rates

after holding the official cash rate at a record-low 1.0%. “We will add further monetary stimulus if needed.”

The New Zealand dollar jumped three-quarters of a U.S. cent after the surprise announcement. It bought 64.09 cents at 2:33 p.m. in Wellington, up from 63.35 cents immediately before the statement. Two-year swap rates rose 21 basis points to 1.25% and the 10-year bond yield gained 17.5 points to 1.54%.

When the RBNZ cut rates in May, it became the first central bank in the developed world to embark on a new easing cycle. While others soon followed suit, recent pauses from the U.S. Federal Reserve andsuggest policymakers want to assess the impact of cuts to date before adding further stimulus. “We expect economic growth to remain subdued over the remainder of the calendar year,” it said. Still, “domestic economic activity is expected to increase during 2020 supported by low-interest rates, higher wage growth and increased government spending and investment. The low level of the OCR has flowed through to lower lending rates more generally, which support spending and investment.”

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