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New Zealand holds interest rate steady at record low

Thursday, May 11, 2017 - 07:00

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"The growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity," central bank governor Graeme Wheeler said.

[WELLINGTON] New Zealand's central bank left its base rate at a record low of 1.75 per cent Thursday and signalled it would stay there "for a considerable period".

In a widely anticipated move, the Reserve Bank of New Zealand said there was no need to change rates amid modest inflation and positive economic growth.

"The growth outlook remains positive, supported by on-going accommodative monetary policy, strong population growth, and high levels of household spending and construction activity," central bank governor Graeme Wheeler said.

The base rate has remained unchanged since November last year, when it was cut from 2 per cent, and analysts do not expect any movement until mid-2018 at the earliest.

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Mr Wheeler shrugged off higher-than-expected March quarter inflation of one per cent, blaming it on temporary factors and saying annual price rises would remain in the bank's one to three per cent target range.

"Longer-term inflation expectations remain well-anchored at around two percent," he said.

He said monetary policy "will remain accommodative for a considerable period", adding the standard caveat that "uncertainties remain and policy may need to adjust accordingly".

AFP

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