The Reserve Bank of New Zealand kept its monetary policy unchanged,
holding interest rates steady at 1.75%, despite expectations of higher prices which
helped the New Zealand dollar to record a three-and-a-half-month high.
The central bank saw the need to keep interest rates at their low level
in order to support growth and employment, especially after the slowdown in the
economy during the past year.
The current state of monetary policy, which includes holding interest
rates at low level, should bolstering investment.
The RBNZ believes the current employment rates are at their highest
levels as more opportunities remain in the employment sector, which will
contribute to household spending and thus higher price levels that would shore inflation
to the central bank's target of 2%.
The RBNZ statement was largely optimistic given the strength of New
Zealand's economic activity, which is pushing up price levels, but the bank is still
demanding more rise in wages.
However, the bank said it does not rule out interest rate cuts as the
monetary policy will rely on economic data and considerations for creating an
environment conducive to growth, highlighting that the current policy remains
the most appropriate.
The New Zealand dollar jumped to a three-and-a-half-month high against
the US dollar, registering 0.6815 before resuming trade at 0.6784.