At its most recent OCR Review the RBNZ left its cash rate unchanged at 3.50%, as widely expected. It left just a hint of a tightening bias in its statement. The Bank was compelled to acknowledge that current inflation remains subdued (and has been consistently below its expectations recently). It sees contributing factors as subdued wage inflation, well-anchored inflation expectations, weak global inflation, falls in oil prices and the high New Zealand dollar. However, it sticks to the view that “inflation is expected to increase as the expansion continues”. This suggests the hiking cycle is not complete, the RBNZ has simply paused.
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