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2026-02-19 13:12:10
[RBNZ Explains "Growth and Inflation Divergence"] Reserve Bank of New Zealand (RBNZ) Assistant Governor Silk recently explained the unique situation the central bank faces: the anticipated strong economic recovery will not bring inflationary pressures. Yesterday, the RBNZ announced it would maintain the official cash rate at 2.25%, signaling a continued accommodative monetary policy. Its core assessment is that while economic growth will accelerate, inflation is expected to slow to the 2% target level. According to the central bank's forecast, the country's economic growth will accelerate to 2.8% by March 2027. Silk stated that the core discussion at this meeting was exploring why economic growth and declining inflation can coexist. She explained that this seemingly contradictory phenomenon is due to the existence of an output gap, meaning the economy can grow faster than its potential without triggering price pressures. Although the central bank's stance is dovish, the market has already clearly anticipated its subsequent policy direction. Currently, investors have fully priced in the possibility of a 25 basis point rate hike in December.
