RBNZ holds cash rate at 2.5%
(14 September 2012 – New Zealand) Reserve Bank of New Zealand (RBNZ) governor Alan Bollard kept the official cash rate (OCR) at 2.5 percent at his final review monetary policy.
Dr Bollard said the weak outlook for the country’s trading partners was a threat to economic growth highlighting that several euro-area economies were in recession while Chinese growth had slowed.
Signs of life in the domestic economy were being offset by the government’s plans for fiscal consolidation and a strong currency that ‘‘continues to undermine export earnings and encourage substitution toward imported goods and services,’’ he said.
Dr Bollard has kept the benchmark interest rate on hold for a record 12 meetings, since he sliced half a percentage point from the OCR in March last year as insurance against the effects of the Canterbury earthquake that levelled the nation’s second-biggest city. The rate is at a record low.
The Reserve Bank is under little pressure to move the rate, with the consumer price index right at the bottom of the central bank’s one percent-to-three percent target band.
Dr Bollard said underlying inflation recently dipped below 2 percent, and ‘‘is expected to settle near the mid-point of the target range of the medium term.’’
Dr Bollard steps down when his second five-year term expires on 25 September and will be replaced by former World Bank executive Graeme Wheeler.
Signs of life in the domestic economy were being offset by the government’s plans for fiscal consolidation and a strong currency that ‘‘continues to undermine export earnings and encourage substitution toward imported goods and services,’’ he said.
Dr Bollard has kept the benchmark interest rate on hold for a record 12 meetings, since he sliced half a percentage point from the OCR in March last year as insurance against the effects of the Canterbury earthquake that levelled the nation’s second-biggest city. The rate is at a record low.
The Reserve Bank is under little pressure to move the rate, with the consumer price index right at the bottom of the central bank’s one percent-to-three percent target band.
Dr Bollard said underlying inflation recently dipped below 2 percent, and ‘‘is expected to settle near the mid-point of the target range of the medium term.’’
Dr Bollard steps down when his second five-year term expires on 25 September and will be replaced by former World Bank executive Graeme Wheeler.
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