RBNZ raises rates
(29 July 2010−New Zealand)Despite deteriorating economic prospects New Zealand’s central bank has raised interest rates for the second time in two months.
The official cash rate was raised by 25 basis points from 2.75 percent to 3.0 percent.
The latest increase was the second in a row after the official cash rate sat at a record low of 2.5 percent for nearly three years.
The Reserve Bank of New Zealand’s governor Allan Bollard said in a post decision statement that despite the outlook for economic growth softening, it is still appropriate to continue to reduce the extraordinary level of support implemented during the 2008-09 recession.
'The world economy continues its fragile recovery. Trading partner growth has turned out stronger than predicted, however, future prospects for growth have deteriorated, Mr Bollard noted.
The governor added that business investment was low, domestic demand was subdued, housing turnover was in decline and household credit growth weak.
The slowing of net immigration was also expected to further dampen consumer spending.
New Zealand's inflation rate has been around 2.0 per cent for the past five quarters and as the economy grows, inflationary pressures are expected to pick up, Mr Bollard said.
The latest increase was the second in a row after the official cash rate sat at a record low of 2.5 percent for nearly three years.
The Reserve Bank of New Zealand’s governor Allan Bollard said in a post decision statement that despite the outlook for economic growth softening, it is still appropriate to continue to reduce the extraordinary level of support implemented during the 2008-09 recession.
'The world economy continues its fragile recovery. Trading partner growth has turned out stronger than predicted, however, future prospects for growth have deteriorated, Mr Bollard noted.
The governor added that business investment was low, domestic demand was subdued, housing turnover was in decline and household credit growth weak.
The slowing of net immigration was also expected to further dampen consumer spending.
New Zealand's inflation rate has been around 2.0 per cent for the past five quarters and as the economy grows, inflationary pressures are expected to pick up, Mr Bollard said.
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