OCR unchanged at 2.5 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2011-10-01

OCR unchanged at 2.5 percent
Published:
27 October 2011
The Reserve Bank today left the
Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: "Domestic activity has
continued to expand at only a modest pace despite relatively strong commodity
prices. More recently, domestic business confidence has fallen back somewhat.
Further ahead, earthquake repairs and reconstruction in Canterbury are still
expected to provide significant impetus for demand.
"As foreshadowed at the time of the September
Monetary Policy
, there is a real risk that the European sovereign debt crisis
could cause a further slowing in global activity, putting downward pressure on
New Zealand's commodity export prices. The difficult international market
conditions could also result in increased New Zealand bank funding costs over
the coming year.
"Annual headline CPI inflation continues to be above the Bank's 1
to 3 percent target band. That largely reflects the one-off effect of last
year's increase in the rate of GST. September quarter inflation data
suggest that, once GST and other one-off influences have passed, underlying
inflation is settling near 2 percent.
"Given the ongoing global economic and financial risks, it remains
prudent to continue to keep the OCR on hold at 2.5 percent for now. However, if
global developments have only a mild impact on the New Zealand economy, it is
likely that gradually increasing pressure on domestic resources will require
future OCR increases."
Media Contact
Sonia Speedy
External Communications
Ph 04 471 3846, 021 663 082,
sonia.speedy@rbnz.govt.nz