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Reserve Bank holds official cash rate at 5.5 percent

Photo: RNZ

The Reserve Bank has held the official cash rate at 5.5 percent

The Reserve Bank has held the official cash rate unchanged at 5.5 percent for the seventh consecutive meeting.

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The central bank said the economy has slowed, unemployment was rising, and acknowledged household budgets were under pressure .

"While weaker capacity pressures and an easing labour market are reducing domestic inflation, this decline is tempered by sectors of the economy that are less sensitive to interest rates," the monetary policy committee said in a statement.

"These near-term factors include, for example, higher dwelling rents, insurance costs, council rates, and other domestic services price inflation. A slow decline in domestic inflation poses a risk to inflation expectations."

It said annual consumer price inflation remained above the 1 to 3 percent target band, and monetary policy needed to remain restrictive to ensure inflation returned to target within a reasonable timeframe.

A set of forecasts issued with the statement showed the OCR staying at 5.5 percent until late in 2025.

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