New Zealand's central bank delayed raising rates on Wednesday as policymakers quickly changed gears after the country was put into a snap COVID-19 lockdown over a handful of new cases, but the bank still expects a hike before year-end.
However, New Zealand's first local COVID-19 infection in six months, reported on Tuesday, and a snap lockdown ordered for the entire nation hosed down those expectations and forced policymakers to confront the risk of a potentially premature move now."Today’s decision was made in the context of the government’s imposition of Level 4 COVID restrictions on activity across New Zealand," RBNZ's monetary policy committee said in a statement.
"The RBNZ took a wait-and-see stance following the new outbreak but it is maintaining forecast of a rate hike in the fourth quarter. It is just a pause for caution rather than a game changer," said Yujiro Goto, chief fx strategist, Nomura Securities, Tokyo.The central bank said its least regretful policy stance is still to further reduce the level of monetary stimulus so as to anchor inflation expectations and continue to contribute to maximum sustainable employment.
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