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OCR to remain steady for rest of the year

OCR to remain steady for rest of the year

(14 June 2013 – New Zealand) Given the present economic outlook, Reserve Bank of New Zealand (RBNZ) Governor, Graeme Wheeler said the bank left the official cash rate unchanged and expected no immediate change.

'We expect to keep the OCR unchanged through the end of the year,' he said.

The central bank is caught between a still-overvalued currency, rising house prices and inflation which remains below the bottom of its 1 percent to 3 percent target band.

The bank's projection for short-term 90-day bank bills is for them to remain flat at 2.7 percent before the first tick-up in the June quarter next year. Rates would slowly rise in the following two years.

The track for 90-day bank bills is slightly higher from the middle of 2015 than assumed by the bank in March, pushing interest rates up slightly faster as domestic demand picks up and the dollar stays up.

Big bank economists have been expecting the first rise in official interest rates to come in the March quarter next year, possibly January or March. Rates have been on hold for two years.

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