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NZ central bank likely to lower OCR

NZ central bank likely to lower OCR

(19 October 2015 – New Zealand) Reserve Bank governor Graeme Wheeler has again indicated that he may lower interest rates.

Wheeler said the global economy “is in a difficult configuration with growth slowing in the developing world, unprecedented monetary accommodation, and prospects of tighter monetary conditions in the US, and further easing in the euro-area and Japan,”

Adding that the central bank required to have “sufficient capacity to cut interest rates if the global economy slows significantly.”

“Recent economic indicators have been more encouraging. Some further easing in the OCR seems likely, but this will continue to depend on the emerging flow of economic data,” he said.

His statement on further lessening being likely echos the monetary policy statement released last month, where the official cash rate (OCR) decreased by a quarter point to 2.75 percent.

The Reserve Bank next reviews the OCR on October 29.

He said in the past that the overheated Auckland housing market was a danger to the nation’s fiscal steadiness because of the risk of a correction.

“We remain conscious of the impact that low interest rates can have on housing demand and its potential to feed into higher price inflation,” Wheeler said.

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