RBNZ lifts rates
(10 June 2010 – New Zealand) The Reserve Bank of New Zealand has increased the nation’s official cash rate, breaking the record low which has been in place since April last year, amid signs of a sustained recovery.
The Reserve Bank’s governor Alan Bollard attributed the rate rise of 25 basis points to 2.75 percent to signs of a sustained recovery, especially within New Zealand’s major trading partners Australia and Asia.
The recovery in trading partner activity is continuing, with growth in Asia particularly strong, Mr Bollard said.
Along with ongoing growth in Australia and recovery in the United States, this has so far offset weak growth in some other export markets. Against this backdrop, New Zealand's export commodity prices have increased sharply over the past few months, boosting export incomes, highlighted Mr Bollard.
ASB economists said the rate rise and the Reserve Bank's accompanying statement held few surprises, with more hikes expected in the coming months.
With the domestic recovery on track, ASB expects the RBNZ will continue to hike the OCR steadily in 25 basis point moves at each meeting, barring a substantial deterioration in New Zealand funding costs as a result of the European sovereign debt crisis, the economists added.
ASB said it expected the RBNZ to keep raising rates by 25 basis points until the OCR meets 5 percent.
The RBNZ’s governor said that further interest rate rises would 'be reviewed in light of economic and financial market developments, however he indicated the official cash rate may not be raised with the speed in which it has been in previous recoveries.
The recovery in trading partner activity is continuing, with growth in Asia particularly strong, Mr Bollard said.
Along with ongoing growth in Australia and recovery in the United States, this has so far offset weak growth in some other export markets. Against this backdrop, New Zealand's export commodity prices have increased sharply over the past few months, boosting export incomes, highlighted Mr Bollard.
ASB economists said the rate rise and the Reserve Bank's accompanying statement held few surprises, with more hikes expected in the coming months.
With the domestic recovery on track, ASB expects the RBNZ will continue to hike the OCR steadily in 25 basis point moves at each meeting, barring a substantial deterioration in New Zealand funding costs as a result of the European sovereign debt crisis, the economists added.
ASB said it expected the RBNZ to keep raising rates by 25 basis points until the OCR meets 5 percent.
The RBNZ’s governor said that further interest rate rises would 'be reviewed in light of economic and financial market developments, however he indicated the official cash rate may not be raised with the speed in which it has been in previous recoveries.
Subscribe