Sharechat Logo

OCR unchanged at 6.75%

Media release

Thursday 9th June 2005

Text too small?
The Reserve Bank has left the official cash rate (OCR) unchanged at 6.75%.

Speaking at the release of the Reserve Bank's June 2005 Monetary Policy Statement, Reserve Bank Governor Alan Bollard said: "Our current review confirms what we said in the March Statement and again at the April OCR review. Activity remains strong across many parts of the economy and inflation pressures remain persistent. Several years of strong growth have led to productive resources becoming stretched, with capacity utilisation and measures of labour shortages remaining at or near record highs.

"However, there is sufficient evidence that the economy is slowing, and that past policy tightenings are yet to have their full effect, for us to leave policy on hold at this point.

"While many businesses see more difficult trading conditions ahead, activity and inflation pressures in some sectors are proving stronger than anticipated. Export prices for some commodities have edged up in recent months. Household spending and housing market activity have remained firmer than expected. Non-residential construction and business investment look likely to be sustained at high levels in the near-term.

"Overall, we assess that the balance of inflation risks remains on the upside. We base this view on the ongoing growth in debt-financed household spending; and on increases in costs - of labour, energy and freight - that are now putting considerable pressure on margins and prices.

"With inflation projected to remain around 3% through most of this year and next, a firm policy stance will be required for some time. We will be watching closely to see if inflation pressures are contained, and further tightening in monetary policy would likely be required if there are upside surprises to the inflation outlook. Certainly, there is no scope for an easing in policy in the foreseeable future."

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
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