OCR unchanged at 1.75 percent
Statement by Reserve Bank Governor Adrian Orr:
The Official Cash Rate (OCR) remains at 1.75 percent.
We expect to keep the OCR at this level through 2019 and into 2020. The direction of our next OCR move could be up or down.
Employment is around its sustainable level and consumer price inflation remains below the 2 percent mid-point of our target, necessitating continued supportive monetary policy. Our outlook for the OCR assumes the pace of growth will pick up over the coming year, assisting inflation to return to the target mid-point.
Our projection for the New Zealand economy, as detailed in the August Monetary Policy Statement, is little changed. While GDP growth in the June quarter was stronger than we had anticipated, downside risks to the growth outlook remain.
Robust global economic growth and a lower New Zealand dollar exchange rate is expected to support demand for our exports. Global inflationary pressure is expected to rise, but remain modest. Trade tensions remain in some major economies, increasing the risk that ongoing increases in trade barriers could undermine global growth. Domestically, ongoing spending and investment, by both households and government, is expected to support growth.
There are welcome early signs of core inflation rising towards the mid-point of the target. Higher fuel prices are likely to boost inflation in the near term, but we will look through this volatility as appropriate. Consumer price inflation is expected to gradually rise to our 2 percent annual target as capacity pressures bite.
We will keep the OCR at an expansionary level for a considerable period to contribute to maximising sustainable employment, and maintaining low and stable inflation.
Meitaki, thanks.
Gold finally breaks out, to the downside, 1160 next
Gold finally breaks out from recent range, to the downside, through 1187.58 support. The development indicates that corrective rebound from 1160.36 has completed. We mark the end point of the correction at 1211.05. Deeper fall should be seen back to 1160.36 low next.
In the bigger picture, Gold is held comfortably below falling 55 day EMA. That suggests fall from 1365.24 is still in progress. Break of 1160.36 low will confirm decline resumption. In that case, next downside target will be 61.8% projection of 1365.24 to 1160.36 from 1211.05 at 1084.43.