Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 7.25 per Cent: 9 March 2006

Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 7.25 per Cent: 9 March 2006

Article excerpt

The Official Cash Rate (OCR) will remain on hold at 7.25 per cent.

Reserve Bank Governor Alan Bollard said: 'Recent data have confirmed our earlier view that economic growth is slowing. Business activity and confidence have been softening for some time. On the other hand, household spending has only recently started to wane. A key driver of strong household spending has been the buoyant housing market which, while showing signs of cooling, still remains very active. Over the next two years, we expect overall growth to remain subdued while a major rebalancing takes place, with a recovery in net exports as domestic demand weakens. A decline in the New Zealand dollar exchange rate is expected to play a role in this rebalancing.

'Despite the slower growth, inflation and cost pressures remain persistent. Labour market and resource pressures have built up over many years of high growth and will take some time to dissipate. …

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