*Newsflash* RBNZ interest rate decision February 2017

RBNZ holds steady. Cash rate remains at 1.75%

LJ Hooker News Flash
  • 10 February, 2017
  • RESIDENTIAL
  • RBNZ, OCR, Official cash rate

What’s the RBNZ thinking?

The RBNZ has adopted a "wait and see" approach at their first monetary policy meeting of 2017 with the board, today, deciding to hold the official cash rate steady at 1.75%.

Motivation for today's decision comes from an improvement in the outlook for the domestic economy combined with the improvement of inflation thanks to increased household spending.

Key indicators
- 6,533 dwellings sold in December 2016, down 11% compared to December 2015.
- The national median price rose 11% from December 2015 to December 2016, and now sits at $516,000.
- The Auckland median price rose 9.1% from December 2015 to December 2016, and now sits at $840,000.
- 1,152 dwellings sold by auction in December, representing 18% of all sales.
- Inflation has risen, up 0.4% in the December quarter, taking annual inflation to 1.3%.
- The unemployment rate rose to 5.2% at at December 2016.
- The NZ Dollar has fluctuated between US$0.69 and US$0.73 over the past month.

Data sources: REINZ, RBNZ, Stats NZ

Looking forward
The message from the RBNZ from today's meeting was a little more positive than seen last year. A pick up in dairy prices, a moderation in house price growth, increased household spending and the expectation that inflation will continue to slowly pick up to 2%, all bode well for the economy moving forward.

However, global economic uncertainty surrounding political events in the US and UK and the potential for a slowdown in the Chinese economy provide an uncertain outlook for 2017. Positively, at 1.75% the RBNZ does have room to cut the official cash rate further if needed.

The next RBNZ OCR meeting will be on 23rd March 2017.

LJ Hooker NZ

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