The RBNZ maintained the official cash rate at 5.5% during its latest meeting, marking the seventh consecutive meeting without a change. The last adjustment to the cash rate occurred in May 2023, when it was raised by 25 basis points from 5.25% to 5.5%.
The RBNZ said economic growth in New Zealand remained weak. Inflation remains high at 4.7%, which is above the RBNZ’s target range. “Current consumer price inflation remains above the committee’s 1% to 3% target range,” the RBNZ said in their announcement.
Impact on the Housing Market
With the cash rate remaining unchanged, the housing market is expected to maintain its current trajectory. Transactions activity and property values are likely to continue rising, albeit at slower rates.
Challenges like affordability constraints and high mortgage rates still persist in the housing market.
Interest Rate Outlook for 2024
Interest rates are anticipated to remain high throughout 2024. Kiwibank economists believe the RBNZ will wait for inflation to break below 3% before considering rate cuts. This milestone is expected in Q3, with continued moderation expected into 2025. This will impact both prospective and existing homeowners.
The market is eagerly awaiting the consumer price inflation data for Q1 2024, which could influence future monetary policy decisions.
The next rate decision will be announced on 1st May 2024.
