OCR reaction: higher interest rates expected
While the central bank kept the official cash rate on hold at 0.25% this week, it reduced its monetary support, ending its LSAP quantitative easing programme from July 23. Markets had expected the central bank to taper down the programme.
The RBNZ also removed wording around needing "considerable time and patience" to meet its targets.
The Reserve Bank pointed to a brighter economic outlook, but cautioned the recent Covid restrictions in Wellington underlined the risks facing New Zealand.
In its statement, the RBNZ said it expected a "near term" spike in CPI inflation, reflecting "one off" or "temporary" factors.
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