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RBNZ Keeps Official Cash Rate Unchanged At 1.75%

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The Reserve Bank of New Zealand on Thursday maintained its Official Cash Rate at the record low of 1.75 percent for the fifth straight meeting.

The decision was in line with expectations following a 0.25 percent rate cut in November.

The central bank has pared a collective 0.50 percent from its benchmark in the last 12 months, lowering the rate in six of the last 16 meetings after six straight sessions with no change.

Global economic growth has become more broad-based in recent quarters, RBNZ Governor Graeme Wheeler noted.

"However, inflation and wage outcomes remain subdued across the advanced economies, and challenges remain with on-going surplus capacity," Wheeler said in a statement accompanying the decision.

He also noted that the exchange rate has increased, partly in response to a weaker greenback.

He added that monetary policy is expected to remain stimulatory - but added that it may be less so going forward.

"GDP in the March quarter was lower than expected, adding to the softening in growth observed at the end of 2016. Growth is expected to improve going forward," Wheeler said.

Domestic inflation eased in the second quarter but remains within the target range, the bank said.

The bank added that the outlook for tradeables inflation remains weak, while the outlook for non-tradeables is moderate but expected to increase gradually.

Longer-term inflation is well anchored around 2 percent, the bank said.

"Monetary policy will remain accommodative for a considerable period. Numerous uncertainties remain, particularly in respect of the international outlook, and policy may need to adjust accordingly," Wheeler said.

by RTT Staff Writer

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