RBNZ interest rate decision March 2017


RBNZ holds steady. Cash rate remains at 1.75%

What’s the RBNZ thinking?

The RBNZ has maintained its neutral monetary policy position and decided to hold the official cash rate steady during today’s board meeting.

Despite persistency soft inflation forecasts, steady economic growth, a pick-up in tourism, ongoing strong population growth and strength in the construction industry all contributed to the March result.

Key indicators - 6,253 dwellings sold in February 2017, down 8.9% compared to February 2016. - The national median price rose 14.1% from February 2016 to February 2017, and now sits at $495,000. - The Auckland median price rose 6.7% from February 2016 to February 2017, and now sits at $800,000. - 921 dwellings sold by auction in February 2017, representing 15% of all sales. - GDP grew by 0.4% in the December 2016 quarter, taking annual growth to 3.1%. - The unemployment rate rose to 5.2% as at December 2016. - The NZ Dollar has fluctuated between US$0.68 and US$0.72 over the past month.

Data sources: REINZ, RBNZ, Stats NZ

Looking forward

Despite the softer than expected December quarter GDP result the RBNZ remains confident in the current direction of the New Zealand economy.

The dollar has been a little softer over the past month thanks mainly to an increase in interest rates by the US Federal Reserve. If maintained, this should help export focused industries; particularly dairy and tourism. Persistent soft inflation remains the main issue of the RBNZ, however, the recent strength in other parts of the economy should be strong enough to see them hold rates steady in short to medium term.

The next RBNZ OCR meeting will be on 11th May 2017.


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