The Reserve Bank has left the official cash rate at 2.75% – but says it expects to cut interest rates soon.
Leaving the OCR at 2.75% was thought to be unlikely this month, as indicated in September when it was last reviewed.
Reserve Bank governor Graeme Wheeler said that a reduction was on the cards.
“It is appropriate at present to watch and wait,” said Wheeler in a statement.
He did note that “some further reduction in the OCR seems likely” to push inflation towards the bank’s target of 1-3%.
Wheeler warned currency market players over the dollar’s rises over the last six weeks, saying that a lower dollar could lift inflation, the exchange rate could dampen activity and have the opposite effect.
In the long term, inflation has been below the Reserve Bank target, and the consumer price index, which is used to measure inflation, currently sits at 0.4%.
