Thursday 24th July 2008
|Text too small?|
Reserve Bank Governor Alan Bollard commented that “more unpleasant international news has emerged since the June monetary policy statement, and there is a risk that the domestic economy will slow further.
Moreover, the cost of funds raised abroad by banks has been rising in recent months as the international financial situation has deteriorated. Today’s cut will help to mitigate the effect of these increases on the actual borrowing costs paid by firms and households.
“Recent oil and food price increases mean that annual CPI inflation should peak around 5% in the September quarter of this year. However, we expect that inflation will return inside the target band in the medium term.
The weaker economy is expected to reduce pressure on resources, making it more difficult for firms to pass on costs and for higher wage claims to be agreed.
“Economic activity is likely to remain weak over the remainder of 2008. The ongoing correction in the housing market, together with the very high oil prices, will limit household spending and constrain the extent of recovery.
However, high export prices and an expansionary fiscal policy are expected to contribute to a gradual pickup in activity through 2009.
“Consistent with the policy targets agreement, the Bank’s focus will remain on medium-term inflation. In this regard, it is important to note that monetary policy has been reasonably tight for some time, and is now restraining activity and medium-term inflation pressures.
Provided that the outlook for inflation continues to improve and there is no excessive exchange rate depreciation, we would expect to lower the OCR further.”
|For more of the week's top news stories for financial advisers. Visit www.goodreturns.co.nz|
No comments yet
18th October 2021 Morning Report
T&G Global Limited (NZX: TGG) FY21 Earnings Guidance Update
Arvida Group Limited (NZX: ARV) Successful Completion of $155m Placement
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