Reserve Bank leaves official cash rate at 5.5%

The Reserve Bank has left its benchmark official cash rate unchanged at 5.5 percent, as expected.

It is the first break in the 21-month tightening campaign which has seen 12 consecutive OCR rises. The Monetary Policy Committee says inflation and economic activity are slowing and it will wait to see its previous rate rises continue to have an effect.

But it's warned that inflation pressures remain high and the OCR will need to stay high for some time.

The central bank signalled in May that the 25 basis point rise then to 5.5 percent should be the last in its battle to combat inflation.

Since then surveys have shown a cooling economy, falling consumer spending, cost pressures easing gradually, and inflation expectations falling.

However, the RBNZ was expected during today's announcement to emphasise that core inflation pressures remain stubbornly high and there would be no prospect of interest rate cuts any time soon.

Speaking from Vilnius in Lithuania earlier today, Labour leader Chris Hipkins ruled out introducing a wealth tax or capital gains tax if Labour was re-elected in October.

More to come...

https://www.rnz.co.nz/news/business/493609/reserve-bank-leaves-official-cash-rate-at-5-point-5-percent