WELLINGTON, Oct. 28 (Xinhua) -- New Zealand's central bank on Wednesday kept the official cash rate unchanged at 2.75 percent, with the monetary policy committee voting 4-3 to hold the rate amid rising inflation risks.
Annual consumer price index inflation eased to 3.7 percent in the September quarter from 4.1 percent in June, coming in lower than expected. However, core inflation measures have risen to around the top of the committee's 1 to 3 percent target band, while price increases have become more broad-based across the economy, the Reserve Bank of New Zealand said in a statement.
The bank expects annual inflation to rise to 4.4 percent in the December quarter, largely reflecting higher fuel prices amid ongoing disruptions in global energy markets. The New Zealand dollar has also fallen by around 3 percent since early September, adding to near-term inflation pressures.
The economy continues to recover, although conditions remain uneven. Export-exposed sectors are benefiting from high commodity prices, strong demand for goods exports and increased tourist numbers, while domestic demand remains subdued outside exporting centers, the statement said.
The committee remains focused on returning inflation to the 2 percent midpoint of its target band over the medium term. It said tighter monetary policy would likely be required, depending on the economic outlook, while warning that prolonged high inflation could affect inflation expectations and price- and wage-setting behavior, making inflation more persistent. ■