WELLINGTON - New Zealand’s central bank surprised investors by holding interest rates at an all-time low of 1% on Wednesday saying it saw no urgency to ease policy further, sending the kiwi dollar sharply higher.
Increases in wage growth and non-tradable inflation together with a weaker local dollar helped by an outsized 50 basis point cut in August, aided the Reserve Bank of New Zealand’s decision. “We expect interest rates to remain low for a long time and it’s a global phenomenon,” RBNZ Chief Economist Yuong Ha told reporters. “We’ll keep watching the data and that will drive our decisions from here and we’ll do what’s required for that.
However, business sentiment remains subdued despite the policy easing. Economists expect at least one more cut to 0.75% as growth in the $200 billion economy is yet to pick up.