OCR unchanged at 2.5 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2013-01-01

OCR unchanged at 2.5 percent
Published:
31 January 2013
The Reserve Bank today left the
Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Graeme Wheeler said: "Global growth is set to
recover in 2013 with economic indicators improving in many of our trading
partners. Consistent with this, global financial market sentiment is positive,
contributing to lower bank funding costs and some reduction in interest rates
faced by households and firms in New Zealand.
"Domestically, recent data on business confidence and construction
activity suggest GDP growth is recovering from the softness seen through the
middle of last year. The Canterbury rebuild is gathering momentum and its impact
will be felt more broadly in incomes and domestic demand. House price inflation
has increased and we are watching this and household credit growth closely. The
Bank does not want to see financial stability or inflation risks accentuated by
housing demand getting too far ahead of supply.
"Inflation remains subdued and is currently just below the bottom of
the Reserve Bank's inflation target range. This mainly reflects the impact
of the overvalued New Zealand dollar. The high currency is directly supressing
inflation on traded goods, and is undermining profitability in export and import
competing industries. At the same time, the labour market remains weak and
fiscal consolidation is dampening growth.
Overall, we expect economic growth to strengthen over the coming year,
reducing spare capacity and bringing inflation slowly back towards the 2 percent
target midpoint.
"On balance, it remains appropriate for the OCR to be held at 2.5
Media contact:
Mike Hannah
Communications
Ph 04 4713671, 021 497418,
mike.hannah@rbnz.govt.nz