The Reserve Bank decision to hold the OCR at 1 percent has come as a surprise, as all the major banks were expecting a drop of 0.25 basis points. Even Westpac economists had reversed their earlier forecast, which was in contrast with their rival commentators.
After a surprise cut in August of 0.50 percent, and no change in September, the announcement yesterday was expected to be a reduction to 0.75 percent.
The Monetary Policy Committee said they had debated whether to reduce the OCR or keep it at 1.0 percent and had reached a consensus that economic developments since the August change indicated the reductions so far this year were stimulating the economy but that it would take time to have its full effect.
The Committee noted that “the risks to the economy in the near term were tilted to the downside” and agreed they “would add further monetary stimulus if economic developments warranted it.”
You read the full statement on the Reserve Bank website.