WELLINGTON, Feb. 18 (Xinhua) -- New Zealand's central bank kept its official cash rate (OCR) unchanged at 2.25 percent on Wednesday, saying inflation is expected to return to target as the economy is "at an early stage in its recovery."
The Reserve Bank New Zealand's (RBNZ) Monetary Policy Committee said in a statement that annual consumer price inflation remained slightly above its 1 to 3 percent target band at the end of 2025, driven mainly by higher food, electricity and local council costs.
However, inflation is forecast to fall to the 2 percent midpoint within the next 12 months, due to modest wage growth and spare capacity in the economy, the committee said.
In response to previous cuts in the OCR, economic growth is broadening across manufacturing, construction and some retail, while activity in agriculture and regional New Zealand remains strong, it said.
The committee said the labor market is stabilizing, though unemployment remains elevated, and house price growth remains weak, dampening household wealth and inclination to spend.
"Risks to the inflation outlook are balanced," with global uncertainty persisting, the RBNZ said, adding that monetary policy is "likely to remain accommodative for some time" and signaled it will gradually normalize settings once inflation falls sustainably towards the target midpoint. ■