New Zealand Central Bank Holds Key Rate As Widely Expected

New Zealand's central bank left its benchmark rate unchanged for the sixth straight session as widely expected on Wednesday, as higher rates help to bring inflation to the target range.

The Monetary Policy Committee of the Reserve Bank of New Zealand, led by Governor Adrian Orr, decided to hold the Official Cash Rate at 5.50 percent.

The RBNZ had raised its policy rate sharply from 0.25 percent in October 2021.

Policymakers observed that the ongoing restrictive policy settings are required to reduce inflation, while avoiding unnecessary instability in output, employment, interest rates and the exchange rate.

New Zealand's economic growth remained weak. While some near-term price pressures remain, policymakers are confident that maintaining the current policy rate was necessary.

The MPC reiterated that interest rates need to remain at a restrictive level for a sustained period to ensure annual consumer price inflation returns to the 1 to 3 percent target range.

Members discussed both upside and downside risks to inflation. They said the balance of risks was little changed since the February Statement.

Although policymakers did not drop any hints as to when it might pivot to looser policy today, they are likely to start cutting rates by August, Capital Economics' economist Abhijit Surya said.