SYDNEY (Reuters) - New Zealand's central bank is set to leave interest rates at a record low this week and keep it there through mid-2020, a Reuters poll of 11 economists showed, as slowing global growth raises domestic economic risks.
The Reserve Bank of New Zealand (RBNZ) will likely keep its official cash rate (OCR) at 1.75 percent on Wednesday after it last eased policy in late 2016, the survey of 11 economists showed.
None of the analysts forecast a rate rise this year compared to six of 15 in February who had predicted at least one hike. Saxo Bank was the outlier in the March poll with a prediction of three rate cuts to 1.00 percent by December.
"We fully expect the RBNZ Governor to keep monetary policy squarely neutral, with a repeat of the sentence 'the next OCR move could be up or down'," said Citi economist Paul Brennan.
"Furthermore, the governor’s policy assessment should retain guidance that the OCR will remain at 1.75 percent for the remainder of this year and 2020."
The RBNZ has repeatedly signalled rates could move in either direction depending on domestic data and the health of the global economy. Figures from Europe, China and the United States have disappointed recently while the U.S. Federal Reserve has abandoned plans to tighten policy this year citing slowing global growth.
Other closely-watched central banks, including the Bank of England and the Reserve Bank of Australia, have downgraded growth forecasts in recent weeks.
New Zealand's NZ$293 billion ($201 billion) economy is growing at a moderate pace although inflation remains low. Data out last week showed growth picked up to 0.6 percent last quarter, double the shocking 0.3 percent the quarter before although it missed the RBNZ's forecast of 0.7 percent growth.
More worryingly for the central bank, the figures showed the GDP deflator was negative in the quarter, implying inflation was negligible despite solid consumption growth.
Inflation has yet to reach the midpoint of the RBNZ's 1-3 percent target band and is unlikely to get there until end-2020, according to the central bank's own forecasts.
"So expect the policy statement to again say 'we will keep the OCR at an expansionary level for a considerable period to contribute to maximising employment, and maintaining low and stable inflation'," Cit's Brennan said.
($1 = 1.4545 New Zealand dollars)
(Editing by Shri Navaratnam)
