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

15 September 2011

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

Reserve Bank Governor Alan Bollard said: "The New Zealand economy has performed relatively well while headline inflation has increased somewhat since the June Statement. At the same time, however, global economic and financial risks have increased.

"Domestic economic activity has surprised on the upside and capacity usage appears to have increased. Continued high export commodity prices and, in time, reconstruction in Canterbury are expected to provide impetus to demand over the projection horizon.

"However, the outlook for New Zealand's trading partners has deteriorated markedly. There is now a real risk that global economic activity slows sharply.

"Global financial market sentiment has also deteriorated. Sovereign debt concerns in Europe and the weakened global outlook have caused international bank funding markets to tighten. If conditions do not improve, New Zealand bank funding costs will increase.

"Largely because the New Zealand economy has been doing better than many others, the New Zealand dollar has appreciated since the June Statement. …

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