OCR decision revealed

The Monetary Policy Committee has decided to keep the official cash rate (OCR) at 1.0%.

Employment is at or slightly above its maximum sustainable level while consumer price inflation is close to the 2% mid-point of our target range. Low interest rates remain necessary to keep employment and inflation around target.

Economic growth is expected to accelerate over the second half of 2020 driven by monetary and fiscal stimulus, and the high terms of trade. The outlook for government investment is stronger following the Government’s announcements in December. There are also indications household spending growth will increase.

However, soft momentum in economic growth has continued into early 2020. Slower global growth over 2019 acted as a headwind to domestic growth. In addition, competitive pressures and recent subdued business confidence have suppressed business investment.