Sharechat Logo

OCR unchanged at 7.25%

Reserve Bank of NZ press release

Thursday 14th September 2006

Text too small?
The Official Cash Rate (OCR) will remain unchanged at 7.25%.

Reserve Bank Governor Alan Bollard said: "The New Zealand economy continues to show resilience. As reported in earlier statements, we have seen clear signs of easing activity and a rebalancing of demand from the domestic to the external sector since late last year. However, economic activity appears to have been stronger than expected through the first half of 2006, with the expansion of employment particularly surprising. Net exports and Government spending have contributed to the buoyancy in activity, while the easing in household consumption has been more moderate than projected. Similarly, while the housing market has slowed, it continues to exhibit momentum. We expect further dampening effects on demand from high oil prices and higher effective mortgage rates over the period ahead. But, even allowing for these effects, we see more inflation pressure than in earlier reviews.

"With overall resource pressures easing more gradually than forecast, annual inflation is not expected to fall below 3% until late 2007. Oil price increases and the depreciation of the exchange rate earlier in the year have pushed headline annual inflation to 4% in the June quarter. Inflation expectations have continued to drift upwards, influenced by the rising headline inflation numbers. While second-round flow-on effects have so far been limited, this remains a risk given the persistence of demand and labour market pressures. We assume that wages and prices are not unduly influenced by the short-term peak in headline inflation.

"Given the continued strength of medium-term inflation pressures, the outlook for monetary policy has become more finely balanced. With inflation now taking longer to move comfortably within the target band of the Policy Targets Agreement (PTA), there is little leeway to withstand further surprises to medium-term inflation pressures. In these circumstances, we are less confident that no further policy tightening will be required in this cycle. In this regard, we will want to be clearer about the economic situation and outlook. However, there is clearly no prospect of an OCR cut for some considerable time."


This is a press release from the Reserve Bank of New Zealand

Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond


  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:

Genesis Power cranks out bumper profit
US visitor numbers leap 38% in January
Tourism ratings get megabuck boost
Business watchdog ready for busy year
Minimal debt impact from airline recap
Export prices weather uncertainty
Figures show tourism was booming
Court clears path for Commerce Commission
Close watch on hydro lakes
State-owned powercos not for sale

IRG See IRG research reports