* RBNZ official cash rate is at 0.25%, as expected
* QE, funding for loans is maintained
* RBNZ says impact of new housing rules to watch (Adds details, analyst comments)
WELLINGTON, April 14 (Reuters) – New Zealand’s central bank left all current policy settings unchanged on Wednesday, saying monetary stimulus should continue to ensure inflation and employment targets are met.
The Reserve Bank of New Zealand (RBNZ) also said it would take time to observe the impact of the new housing market measures and the gradual revival of tourism on its economic recovery.
It keeps the official cash interest rate (OCR) at a record low of 0.25%, while also continuing the NZ $ 100 billion ($ 70.55 billion) quantitative easing tool and the Funding for Lending Program (FLP), both introduced last year to support a market hit by the COVID-19 pandemic.
“There is no reason for the RBNZ today to deviate from the ‘wait and see’ and ‘least regrettable’ strategy, or to sway the market price for an OCR hike, with markets on-board with the RBNZ message that tightening remains. prospects are distant, “said Sharon Zollner, chief economist at ANZ.
The central bank cut its cash rate by 75 basis points in March last year and pledged not to change for 12 months, while also introducing quantitative easing to support the economy. A Reuters poll expects the RBNZ to keep interest rates on hold and keep other tools of easing unchanged.
The RBNZ said inflation will surge in the near future, even exceeding the 2% target midpoint due to supply chain disruptions and rising oil prices, but this is temporary.
It reiterates that the prospect remains “very uncertain” and that meeting its targets will take a lot of time and patience.
“The committee agrees that medium-term inflation and employment will likely remain below its delivery target in the absence of a prolonged monetary stimulus,” said RBNZ.
Business sentiment has faded in recent months despite a tremendous rebound in economic activity following the COVID-19 lockdown, and the economy contracting in the last quarter of 2020.
But these losses are offset by improving global prospects, and the return of Australian tourists to New Zealand next week via the COVID-19 ‘travel bubble’ arrangement.
The government, under pressure to cool the hot housing market, also introduced a series of measures in March that saddled investors with new taxes.
The RBNZ committee said housing measures are likely to dampen price growth but the extent of their influence will take time to observe.
It is recognized that stimulating monetary policy played a role in lifting house prices, along with other factors.
The government last year tasked the central bank with considering the impact of its monetary and financial policy decisions on housing prices, a move to help calm heating markets.
$ 1 = 1.4174 New Zealand dollars Edited by Jacqueline Wong