Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 6.50 per Cent: 9 December 2004

Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 6.50 per Cent: 9 December 2004

Article excerpt

The Reserve Bank has left the OCR unchanged at 6.50 per cent.

Speaking at the release of the Reserve Bank's December 2004 Monetary Policy Statement, Reserve Bank Governor Alan Bollard said "As indicated in our October Review, we continue to expect that the current policy position will achieve inflation between 1 and 3 per cent on average over the medium term. This outlook assumes that significant pipeline effects from past interest and exchange rate increases will eventuate and act to further constrain the economy over the period ahead.

"Since the last review, overall economic indicators have continued to surprise on the upside. As a result, we have revised upwards our GDP estimates for the second half of 2004 and pushed out our expected timing of the economic slowdown. But the slowdown is still expected in 2005. The easing in house sales, residential building consents and net immigration remain in line with our earlier projections. Reinforcing this outlook is a weakening exports picture, based on softer world growth and the constraining effects of the strong NZ dollar.

"Inflation is projected to rise close to 3 per cent before easing back later in 2006. …

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