This article is from the Australian Property Journal archive
THE Reserve Bank of New Zealand has left the official cash rate unchanged at 2.5%.
Reserve Bank Governor Alan Bollard said the economy has grown more strongly than was expected, and it appears that the recovery is getting back on track however, current fragility in global financial markets continues to highlight the downside risk.
“Annual headline CPI inflation continues to be above the Bank’s 1 to 3% target band. However, much of the current spike in inflation has been driven by the October 2010 increase in the rate of GST, and will therefore be temporary. Wage and price setters should focus on underlying inflation, which is currently estimated to be below 2.5%.
“Provided current global financial risks recede and the economy continues to recover, the Bank sees little need for the March 2011 ‘insurance’ cut to remain in place much longer. The current very high value of the New Zealand dollar is acting as a drag on the New Zealand economy. If this persists, it is likely to reduce the need for further OCR increases in the short term,” he concluded.
Australian Property Journal
