OCR unchanged at 7.25 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2006-04-01

OCR unchanged at 7.25 percent
Published:
27 April 2006
The Official Cash Rate (OCR) will remain at 7.25
Reserve Bank Governor Alan Bollard said: "Data since our
March Monetary Policy
Statement (MPS)
indicate that, while the economy has weakened faster than
expected, short-term inflation pressures have intensified.
"The anticipated slowdown in domestic demand commenced in the latter
part of 2005 and is projected to continue through this year. This will be
partly offset by growth in exports and import substitution, reinforced by the
recent decline in the exchange rate. Recent economic indicators suggest the
economy will continue to grow modestly through 2006.
"Despite the easing in resource pressures, the short-term inflation
outlook has worsened. The exchange rate drop will boost import prices. We also
expect significant further price rises over coming quarters as a result of the
ongoing world oil shock. These effects are expected to keep annual CPI
inflation above 3 percent for longer than previously projected and risk putting
upward pressure on inflation expectations.
"Monetary policy remains focussed on ensuring that inflation settles
back within the 1-3 percent target band over the medium term. As we have
stated previously, policy will not try to counteract the one-off boost to prices
from the exchange rate and oil price shocks. In this regard, we still do not
expect to raise interest rates again in this cycle. However, monetary policy
must remain vigilant against these price shocks spilling over into inflation
expectations, and price and wage-setting behaviour. Given the current outlook,
we maintain our March
view and continue to see no scope for a cut
in the OCR this year."
For further information contact:
Mike Hannah
Communications
Ph 04 4713671, 021 497418,
mike.hannah@rbnz.govt.nz