Latest OCR decision
On Wednesday 18 February, the Monetary Policy Committee agreed to hold the Official Cash Rate to 2.25%.
Economic activity is recovering, supported by low interest rates and high export prices.
The labour market remains weak, but businesses are starting to take on more workers.
Inflation is slightly above our target range but will fall this year.
Economic growth is increasing, with activity in more industries improving. High prices for exports like dairy and meat have lifted incomes for farmers and other primary producers. Low interest rates are also supporting higher spending by households and businesses.
We expect the economic recovery to strengthen as low interest rates continue to support spending and activity.
We expect the economic recovery to strengthen as low interest rates continue to support spending and activity.
The unemployment rate has risen to 5.4%, as the number of people looking for work has grown faster than the number of available jobs. However, businesses are starting to hire more workers as economic activity increases.
We expect unemployment to decline this year as the strengthening economic recovery leads to increased job creation.
Inflation increased to 3.1% at the end of last year. Higher prices for food and overseas travel have pushed tradables inflation higher. Non-tradables inflation has fallen a lot. However, large price increases for administered prices, including electricity and council rates, have made non-tradables inflation fall more slowly.
Spare capacity in the economy is continuing to ease price pressures. It is likely that inflation is already within our 1 to 3% target range in the first quarter of this year. Inflation is expected to decline towards 2% within the next year.
Spare capacity in the economy is continuing to ease price pressures. It is likely that inflation is already within our 1 to 3% target range in the first quarter of this year. Inflation is expected to decline towards 2% within the next year.