Our take on the latest Monetary policy review (Wed 25 Sept 2019)
OCR remains at 1.00%
RBNZ signals another possible cut before 2020
Global economic arena deteriorates
The key numbers...
- Unlike in August, the Reserve Bank acted as expected by financial markets, keeping the official cash rate (OCR) at the historically low level of 1.0% in September.
- The Reserve Bank Committee was happy to see last month’s aggressive cut of 50 basis points flow through to lower retail rates and a depreciation in the exchange rate.
- The Reserve Bank signalled an easing bias saying, “there remains scope for more fiscal and monetary stimulus, if necessary”.
- The Bank expects domestic demand to improve as household spending and the construction sector are “supported by low interest rates”. The Bank hopes these lower interest rates will help reignite investment in the face of demand pressures, but also expressed concern over weak international demand, policy uncertainty, and low profitability stifling the ability of businesses to plan ahead.
Global growth expectations by month
Year-end GDP % change
...and our reaction
- The Reserve Bank maintains its view that record low interest rates are justified in the face of softer inflation and slowing economies, both domestically and internationally.
- The Reserve Bank Committee repeatedly mentioned the scope for fiscal stimulus to prop up the economy, despite it being outside the Bank’s control, which sends a clears signal to the government that they’d like some help.
- Between now and the next Monetary Policy Statement in November, several indicators could be the catalyst for another OCR cut. Business confidence, inflation, and employment are all key data releases, and we expect enough weakness in these numbers to lead to another rate cut on November 13.
Latest updates
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Wed 18 Feb 2026
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