Dollar up as bank holds cash rate

The Reserve Bank has surprised no-one by leaving the official cash rate (OCR) on hold at 1.75 per cent, while cautioning a lull in house price rises could be temporary.

Banks and analysts pored over its latest commentary for a sense of where rates may go next – and when – but found few fresh clues.

The Reserve Bank said monetary policy would remain ‘‘accommodative’’ for ‘‘a considerable period’’.

But it gave itself wriggle room to change tack, saying ‘‘numerous uncertainties remain and policy may need to adjust accordingly’’.

The Reserve Bank noted GDP growth in the March quarter was lower than expected and also said a lower New Zealand dollar would help create better-balanced economic growth.

It expected a ‘‘moderation’’ in house price rises to continue.

All of those comments point to a low OCR. But it countered that by saying the growth outlook remained positive, supported by strong population growth and high terms of trade.

‘‘Recent changes announced in Budget 2017 should support the outlook for growth,’’ it said.

It also warned there was a risk of a resurgence in house price rises ‘‘given the ongoing imbalance between supply and demand’’.

Inflation was heading towards the midpoint of its target band over the medium term, it said.

‘‘Longer-term inflation expectations remain well-anchored at around 2 per cent.’’

ASB said it continued to expect the OCR to remain on hold until late next year.

The tone of the Reserve Bank’s statement was largely unchanged ‘‘except where it acknowledged recent developments and these comments were in line with our expectations’’, it said.

ANZ said it still expected the OCR to go up next year, ‘‘given our belief that the economy will grow at a rate that will gradually eat into capacity’’.

The Reserve Bank itself was ‘‘some way away from embracing that mind-set’’, it said.

Financial markets pushed the kiwi slightly higher in the wake of the OCR statement yesterday. The kiwi rose from US72.31 cents to US72.5c and gained 0.15c against the euro.

It had held onto similar advances against the battered British pound and the Australian dollar by late afternoon.

Banks had previously warned mortgage rates might rise despite expectations that the OCR could remain on hold until 2019.

They have cautioned that New Zealand’s low savings rate is forcing them to go overseas and pay higher rates to fund the country’s house-price boom.

and Bauer’s New Zealand chief executive, Paul Dykzeul, has been named as Chan’s replacement and will lead the company’s Australian and New Zealand operations.

Steel & Tube opens complex

Steelmaker Steel & Tube has opened a new $9.45 million Dunedin facility, consolidating several sites into one. The 8000-square-metre warehousing, office and trade shop complex was opened by Dunedin MP Michael Woodhouse on Wednesday. The building marks another milestone in the firm’s multimilliondollar reinvestment programme, which includes a megastore at Auckland’s Savill Drive in 2015. Steel & Tube chief executive Dave Taylor said plans were afoot to increase the company’s Dunedin workforce.

Ateed appoints top executive

The Auckland Council’s economic growth agency has named the former boss of the Commerce Commission as its new chief executive. Auckland Tourism, Events and Economic Development (Ateed) said Nick Hill would replace outgoing chief executive Brett O’Riley in August. Hill, an executive director of consulting firm MartinJenkins, has held various senior management positions over the past 30 years, including Commerce Commission chief executive, leading the establishment of the former Sport New Zealand, Sport and Recreation New Zealand (Sparc), and roles with Fletcher Energy and the Electricity Corporation of New Zealand.