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

9 June 2011

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

Reserve Bank Governor Alan Bollard said: "The outlook for the New Zealand economy has improved since the publication of the March Statement.

"Economic activity has been significantly disrupted by the Christchurch earthquake. However, while many firms and households--particularly within Canterbury--continue to be adversely affected, it appears the negative confidence effect of the earthquake on economic activity throughout the rest of the country has been limited.

"The early signs of recovery noted in the March Statement have continued. Despite some continuing signs of weakness in the world economy, commodity prices remain very strong and firms expect to increase their hiring and capital investment. Reconstruction in Canterbury is projected to add about 2 percentage points to GDP growth over 2012, and boost the level of activity for several years thereafter.

"Despite the strong outlook for export earnings, household expenditure is expected to grow only modestly. Household debt remains very high and is expected to constrain retail spending and the housing market for some time. …

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