Reserve Bank keeps official cash rate at record low

The Reserve Bank this afternoon announced it will be keeping its official cash rate at the record low rate of 0.25 per cent.

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The move means low interest rates look set to stay for some time yet. Source: 1 NEWS

In a statement the Reserve Bank says the decision comes amid a "highly uncertain" economic outlook in New Zealand and globally.

"The global economic outlook has continued to improve since the February Monetary Policy Statement. Ongoing fiscal and monetary stimulus are continuing to underpin the global recovery in economic activity," the Reserve Bank states.

"However, economic uncertainty remains elevated and divergences in economic growth both within and between countries are significant. New Zealand’s commodity export prices continue to benefit from robust global demand."

While economic activity in New Zealand slowed over the summer months, the Reserve Bank believes the upcoming trans-Tasman travel bubble should provide a much needed boost.

"However, the net impact on overall domestic spending will be determined by the two-way nature of this travel," the bank says.

"The extent of the dampening effect of the Government’s new housing policies on house price growth, and hence consumer price inflation and employment, will also take time to be observed."