• OCR on hold at 2.5%, as universally expected.
• RBNZ sees stronger house price inflation pressures and stronger domestic demand.
• RBNZ still sees NZD overvalued despite recent declines, outlook for NZD to remain elevated.
The RBNZ kept the OCR on hold at 2.5%, as universally expected. The Monetary Policy Statement itself did not contain any major surprises. There was, though, some interesting discussion of the outlook for the NZ economy and interest rates. While the growth forecasts are relatively similar to the March MPS, the RBNZ does sound more upbeat about the footing of the NZ economy and the sustainability of growth. Meanwhile, house price and, as a result, inflation forecasts were revised up.
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