OCR unchanged at 2.5 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2009-07-01

OCR unchanged at 2.5 percent
Published:
30 July 2009
The Official Cash Rate (OCR) will
remain unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: "Despite signs of a leveling
off in economic activity, the economy remains weak. We continue to expect to
see a patchy recovery get underway toward the end of the year, but it will be
some time before growth returns to healthy levels.
"The outlook remains highly uncertain. New Zealand's merchandise
exports are heavily weighted to soft commodities. As a result, New Zealand has
not benefited to any significant extent from the rebound that has occurred
recently in global hard commodity prices.
"Overall economic growth is evolving broadly in line with our forecasts
in the June
Monetary Policy Statement
as the low OCR and stimulatory
fiscal policy take effect. However, looking forward the level of the New Zealand
dollar and wholesale interest rates are higher than assumed in our forecasts.
The level of the dollar in particular, is not helping the sustainability of
future growth, and brings with it additional economic risks.
"The forecast recovery is based on a further easing in financial
conditions. If this easing does not occur, the forecast recovery could be put at
risk. In these circumstances we would reassess policy settings.
"Annual CPI inflation is currently well within the target band and it
is expected to track comfortably within it over the medium-term.
"We consider it appropriate to continue to provide substantial monetary
policy stimulus to the economy. The OCR could still move modestly lower over
the coming quarters. We continue to expect to keep the OCR at or below the
current level through until the latter part of 2010."
Media contact:
Anthea Black
External Communications Adviser
04 471 3767, 021 222 5225
anthea.black@rbnz.govt.nz