*Newsflash* RBNZ interest rate decision February 2017

RBNZ holds steady. Cash rate remains at 1.75%

LJ Hooker News Flash
  • 10 February, 2017
  • RBNZ, OCR, Official cash rate

What’s the RBNZ thinking?

The RBNZ has adopted a "wait and see" approach at their first monetary policy meeting of 2017 with the board, today, deciding to hold the official cash rate steady at 1.75%.

Motivation for today's decision comes from an improvement in the outlook for the domestic economy combined with the improvement of inflation thanks to increased household spending.

Key indicators
- 6,533 dwellings sold in December 2016, down 11% compared to December 2015.
- The national median price rose 11% from December 2015 to December 2016, and now sits at $516,000.
- The Auckland median price rose 9.1% from December 2015 to December 2016, and now sits at $840,000.
- 1,152 dwellings sold by auction in December, representing 18% of all sales.
- Inflation has risen, up 0.4% in the December quarter, taking annual inflation to 1.3%.
- The unemployment rate rose to 5.2% at at December 2016.
- The NZ Dollar has fluctuated between US$0.69 and US$0.73 over the past month.

Data sources: REINZ, RBNZ, Stats NZ

Looking forward
The message from the RBNZ from today's meeting was a little more positive than seen last year. A pick up in dairy prices, a moderation in house price growth, increased household spending and the expectation that inflation will continue to slowly pick up to 2%, all bode well for the economy moving forward.

However, global economic uncertainty surrounding political events in the US and UK and the potential for a slowdown in the Chinese economy provide an uncertain outlook for 2017. Positively, at 1.75% the RBNZ does have room to cut the official cash rate further if needed.

The next RBNZ OCR meeting will be on 23rd March 2017.

LJ Hooker NZ

Recent Articles

Click here to view our myMarket Reports for the latest property market evaluations