RBNZ holds OCR
(27 July 2012 – New Zealand) The Reserve Bank of New Zealand (RBNZ) held the official cash rate at 2.5 percent, given a "poor" outlook for the country’s trading partners and a limited risk of a meltdown in the eurozone.
RBNZ governor Alan Bollard said the country's economic outlook remains consistent with that described by the bank in its June Monetary Policy Statement.
'It remains appropriate for the OCR to be held at 2.5 percent,' he said.
Announcing the interest rate review this morning, Bollard said: 'New Zealand's trading partner outlook remains poor, with several euro-area economies in recession. There remains a limited risk that conditions in the euro area deteriorate very significantly.'
He said the bank continues to monitor the situation carefully given the potential for rapid change.
'Domestically, the bank continues to expect economic activity to grow modestly over the next few years. Housing market activity continues to increase as forecast, and repairs and reconstruction in Canterbury are expected to further boost the construction sector,' Bollard said.
'Offsetting this, fiscal consolidation and the exchange rate are constraining demand growth. Underlying annual inflation, which recently moved below 2 percent, is expected to settle near the mid-point of the target range over the medium term.'
Economists had expected rates to be held with low inflation, at just 1 percent for the June year, flat business conditions and falling commodity prices showing a weak economic recovery.
'It remains appropriate for the OCR to be held at 2.5 percent,' he said.
Announcing the interest rate review this morning, Bollard said: 'New Zealand's trading partner outlook remains poor, with several euro-area economies in recession. There remains a limited risk that conditions in the euro area deteriorate very significantly.'
He said the bank continues to monitor the situation carefully given the potential for rapid change.
'Domestically, the bank continues to expect economic activity to grow modestly over the next few years. Housing market activity continues to increase as forecast, and repairs and reconstruction in Canterbury are expected to further boost the construction sector,' Bollard said.
'Offsetting this, fiscal consolidation and the exchange rate are constraining demand growth. Underlying annual inflation, which recently moved below 2 percent, is expected to settle near the mid-point of the target range over the medium term.'
Economists had expected rates to be held with low inflation, at just 1 percent for the June year, flat business conditions and falling commodity prices showing a weak economic recovery.
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