OCR unchanged at 2.5 percent

The Reserve Bank today left the Official Cash Rate unchanged at 2.5 percent.

“House price inflation is high in Auckland and other regions due to the housing shortage, and demand pressures associated with low interest rates and rising net inward migration. Restrictions on high loan-to-value mortgage lending, introduced in October, should help slow house price inflation. Data to date are limited on the effects of these restrictions. We will continue to monitor outcomes in the housing market closely.

And The Governor in an explicit warning, which will very much maintain the widely held view of rising floating interest rates next year, added in the following..“The Bank will increase the OCR as needed in order to keep future average inflation near the 2 percent target midpoint”.