As expected, the RBNZ left all monetary policy measures unchanged at the April meeting. While acknowledging the dampening effects of the government’s housing policy, policymakers need more time to assess the impacts on the real economy. Meanwhile, the members appear more comfortable with the current level of New Zealand dollar. This explains the rise of kiwi after the meeting.

On the economic developments, the central bank noted that “the global economic outlook has continued to improve”. It, however, reiterated that “economic uncertainty remains elevated and divergences in economic growth both within and between countries are significant”. Domestically, policymakers acknowledged that economic activities “slowed over the summer months following the earlier rebound in domestic spending” and that “short-term data continues to be highly variable as a result of the economic impacts of COVID-19”. Concerning the Trans-Tasman travel bubble, the central bank expects that it should support the tourism sector in both countries. It, however, added that “the net impact on overall domestic spending will be determined by the two-way nature of this travel”. The RBNZ suggested that the Government’s recent housing policy changes would have a “dampening effect” on house price growth. However, it takes time to observe how it would affect inflation and employment.