What's the RBNZ thinking?

After cutting the cash rate by 25 basis points last month, the RBNZ in late April decided to keep interest rates steady at 2.25%. Despite a stronger New Zealand Dollar and ongoing low inflation, there have been no clear signs that the New Zealand economy has deteriorated significantly since the RBNZ last met.

OCR holds steady
  • 29 April, 2016
  • Official cash rate, Steady, OCR, RBNZ

Effect on property markets

Today's decision from the RBNZ will have little effect on property markets across the country because the cash rate, at 2.25%, is low enough to support buyer enquiry and demand. Ongoing population growth, strengthening local economies and tight listing numbers continue to be the main driver of property market activity and price growth.

Key Indicators

- 9,527 dwellings sold in March 2016, up 8.2% compared to March 2015.
- The national median price rose 4.2%, from March 2015 to March 2016, and now sits at $495,000.
- Inflation remains very low up 0.2% in the March quarter taking annual inflation to 0.4%.
- Visitor arrivals numbered 344,400 in March 2016, up 18% compared to March 2015.
- The NZ Dollar has traded between US$0.67 and US$0.70 during April.

Looking forward

Ongoing soft inflation and wage growth combined with global economic uncertainty has seen the RBNZ shift its monetary policy position to a more explicit easing bias. This means that another rate cut during 2016 remains firmly on the table.

The next RBNZ OCR meeting will be on 9th June 2016.

LJ Hooker NZ

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