Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 3.0 Percent: 9 December 2010

Academic journal article The Reserve Bank of New Zealand Bulletin

OCR Unchanged at 3.0 Percent: 9 December 2010

Article excerpt

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 3.0 percent.

Reserve Bank Governor Alan Bollard said: "Interest rates are now projected to rise to a more limited extent over the next two years than signalled in the September Statement.

"The pace of economic growth appears to have moderated. Corporate investment intentions are now below average. Household spending also remains weak, with household credit still flat and housing market activity slowing further. House prices may decline a little further in the near term. This continued household and business caution suggests current low interest rates are having a less stimulatory effect than in the past.

"On the positive side, activity in New Zealand's trading partners continues to expand. Growth in the Asia-Pacific region remains strong, and growth in the US and UK has turned out a little stronger than was projected. Consistent with this, export commodity prices, which were already very high, continue to increase. While this is encouraging, downside risks to global growth and export prices persist.

"Repairs to earthquake damage in Canterbury are expected to add to GDP growth over the projection period. The earthquake appears to have caused about $5 billion of damage to infrastructure, and residential and commercial property. …

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