The Monetary Policy Committee agreed to reduce the current stimulatory level of monetary settings in order to meet its consumer price and employment objectives over the medium-term, New Zealand's central bank said today in a statement.
"The Reserve Bank will halt additional asset purchases under the Large Scale Asset Purchase (LSAP) programme by 23 July 2021," it said.
The move was more aggressive than the market expected and the New Zealand dollar spiked on the news.
The committee will hold the Official Cash Rate (OCR) at 0.25% and the Funding for Lending Programme unchanged.
"The global economic outlook continues to improve, providing ongoing price support for New Zealand's export commodities," the RBNZ said.
"Global monetary and fiscal settings remain at accommodative levels supporting the recovery in economic activity.
"Rising vaccination rates across many countries are providing further economic impetus.
"However, the need to reinstate Covid-19 containment measures in some regions highlights the ongoing global health and economic risks posed by the virus".
Last week's stronger-than-expected Quarterly Survey of Business Opinion prompted the big four commercial banks to bring forward their rate hike expectations from early 2022 to November this year.
Today ASB and KiwiBank responded to the shift in market pricing by lifting mortgage and deposit rates.
