Reserve Bank raises OCR to 8.25 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2007-07-01

Reserve Bank raises OCR to 8.25 percent
Published:
26 July 2007
The Official Cash Rate (OCR) will
increase by 25 basis points to 8.25 percent.
Reserve Bank Governor Alan Bollard said: "The New Zealand economy is
running strong. We are recording continued big increases in international
commodity prices, especially dairy, reflecting solid world demand for our
"This is very good news for New Zealand. Given this positive
situation, some of the negative commentary circulating about the economy is
unwarranted.
"However, the continued tight labour market, high capacity use, and
rising oil and food prices all point to sustained inflationary pressures. That
is why we are increasing the OCR today.
"The New Zealand dollar has reached very high levels recently, driven
by US dollar weakness and New Zealanders' heavy demand for borrowing.
This level of the currency has been hurting exports.
"The high New Zealand dollar is not sustainable medium term and
investors should understand this. The higher OCR now gives strong incentives to
New Zealanders to save.
"New Zealanders have been showing early signs of moderating their
borrowing.
Provided they keep this up, and the pressure on resources continues to ease,
we think the four successive OCR increases we have delivered will be sufficient
to contain inflation."
For further information contact:
Mike Hannah
Communications
Ph 04 4713671, 021 497418,
mike.hannah@rbnz.govt.nz