Sharechat Logo

The official cash rate (OCR) will remain unchanged at 8.25%.

Thursday 6th March 2008

Text too small?
Reserve Bank Governor Alan Bollard said: “The outlook for economic activity has deteriorated somewhat since we reviewed the OCR in January.

The main reasons are weaker prospects for world growth, tighter credit conditions, a sharper-than-expected slowing in the housing market, and recent dry weather conditions. On balance, we now expect GDP growth of around 2% over the next three years.

“Despite the weaker outlook for activity, we expect headline inflation to remain high, partly due to the inclusion of the planned emissions trading scheme in our projection. Higher food and energy prices are also contributing to near-term inflation.

Furthermore, over the medium term, a tight labour market, strength in commodity prices, and the impact of announced government spending plans and assumed personal tax cuts will add to inflationary pressure. Excluding the effects of the emissions trading scheme, inflation is projected to return close to the mid-point of the target band by 2010.

“There is more uncertainty than usual at present, with downside risks to activity and upside risks to inflation. The main downside risks are a further deterioration in the world economy, tighter credit conditions, and the potential for a more severe downturn in the housing market.

Conversely, further strength in labour costs, additional fiscal stimulus, and high inflation expectations represent key upside risks to underlying inflation.

“Given this outlook, we expect that the OCR will need to remain at current levels for a significant time yet to ensure inflation outcomes of 1 to 3% on average over the medium term.”

For more of the week's top news stories for financial advisers. Visit www.goodreturns.co.nz


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

FreshLeaf: Cannabis on course to be 'medicine of the masses'
Arvida Group Limited (NZX: ARV) to Acquire Arena Living Retirement Living Portfolio
My Food Bag Group Limited (NZX: MFB) Market Update and HY Results Announcement Date
Harmoney Corp Limited (NZX: HMY) Delivers Record September Quarter
Vital Healthcare Property Trust (NZX: VHP) Announces Successful Completion of $115m Placement
14th October 2021 Morning Report
General Capital Limited (NZX: GEN) Completes Greenfern Listing
LISTING AND QUOTATION NOTICE: NZX MAIN BOARD - GREENFERN INDUSTRIES LIMITED
13th October 2021 Morning Report
Hotel Montreal: Patterson Family Buys Christchurch's Hotel Montreal