Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 2.5 Percent

Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 2.5 Percent

Article excerpt

10 September 2009

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Alan Bollard said: "There is more evidence that the decline in economic activity is coming to an end, and that a patchy recovery is underway.

"This is partly due to recovery in our trading partner economies in the June quarter and these look likely to continue expanding in the short term. Domestically, retail spending appears to have stopped falling, following a rise in net immigration and a pick-up in the housing market over recent months.

"However, the medium-term growth outlook remains weak. We expect household spending to grow only modestly given weak income growth and a reduced appetite to take on debt. Business profits are under pressure because of the low level of activity and the elevated New Zealand dollar; this limits the scope for employment and investment to rebound quickly.

"For growth to be sustained in the medium term there is a need for improved competitiveness in the export sector and a continued recovery of household savings. …

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