Official Cash Rate stays the same

The Official Cash Rate (OCR) remains unchanged at 1 percent.

In a statement released on Wednesday, Reserve Bank Governor Adrian Orr said the decision to keep the rate the same is based on employment nearing its maximum sustainable level, with underlying inflation close to (but below) 2 percent.

On the downside, GDP growth has continued to slow and business investment and household spending have been soft.  

The global economy has also had a dampening effect, including higher tariffs, declining global trade flows and ongoing policy uncertainty, which have suppressed global demand.

On a positive note, house price inflation, a lower exchange rate and government spending are expected to have a positive impact on growth in 2020.

"The reduction in the OCR over the past six months has seen lending and deposit interest rates fall.

"The recent pick-up in house price inflation and depreciation of the New Zealand dollar exchange rate are expected to contribute to higher growth over the next year," Orr said.

"Higher government spending provides support to GDP growth over the same period," he added.

Ahead of Wednesday's announcement, local economists told Newshub they were uncertain of a cut, with Kiwibank putting a 60 to 70 percent chance on a 25bp cut to 0.75 percent.

After The Reserve Bank dropped the Official Cash Rate by a bold 50 basis points (bp) to 1 percent in August, the dust was left to settle with no change made on 25 September.