Academic journal article The Reserve Bank of New Zealand Bulletin

Official Cash Rate Increased to 5.5 Percent. (for the Record: Recent Press Releases)

Academic journal article The Reserve Bank of New Zealand Bulletin

Official Cash Rate Increased to 5.5 Percent. (for the Record: Recent Press Releases)

Article excerpt

15 May 2002

The Reserve Bank today increased the Official Cash Rate from 5.25 per cent to 5.5 per cent.

Reserve Bank Acting Governor Rod Carr commented "Demand conditions no longer warrant the degree of interest rate stimulus that seemed necessary late last year. The economy's ability to meet increasing demand without pressure on costs, margins and therefore prices appears limited. Core inflation is still at the upper end of the 0 to 3 per cent target band, leaving little headroom for price pressures to accelerate from here on.

"Pressures on resources look likely to be maintained in the foreseeable future. New Zealand's population is expanding rapidly with the sharp turnaround in net migration. Migration is contributing more to strong household spending, residential construction and housing market activity than it is to the availability of labour. And a recovery in global demand -- although fragile in some respects -- is now underway with Consensus Forecasts rather more optimistic than earlier in the year.

"The influences on inflation are not all operating in the same direction. …

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