Breaking: RBNZ keeps OCR on hold at 0.25%, NZD/USD jumps

The Reserve Bank of New Zealand (RBNZ) board members decided to keep the Official Cash Rate (OCR) steady at a record low of 0.25% in May, as unanimously expected.

The RBNZ maintained the size of its quantitative easing (QE) programme at NZD100 billion.

Funding for lending programme remains unchanged, the central bank said.

Additional takeaways

To maintain stimulatory monetary settings until it confident that inflation and employment targets achieved.

Near-term economic data will continue to be highly variable.

Aggregate level of employment has also proved resilient, while fiscal spending continues to support domestic economic activity.

Tourism-related business activity continues to be affected by the absence of international visitors.

Medium term inflation employment to remain below remit targets in the absence of stimulus.

Effect of the government’s new housing policies on house price growth and hence economic activity will also take time to be observed.

Medium-term outlook for growth remains similar to the scenario presented in the February.

NZD/USD reaction 

The NZD/USD jumped nearly 25 pips in a knee-jerk reaction to the RBNZ decision, now trading at weekly highs of 0.7269, up 0.55% on the day.

About RBNZ Interest Rate Decision

RBNZ Interest Rate Decision is announced by the Reserve Bank of New Zealand. If the RBNZ is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the NZD.