OCR unchanged at 2.5 percent - Te Pūtea Matua
Central bank: rbnz | Type: statement | Date: 2011-04-01

OCR unchanged at 2.5 percent
Published:
28 April 2011
The Reserve Bank today left the
Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: "The outlook for the New
Zealand economy remains very uncertain following February's Christchurch
earthquake.
"As was expected, business confidence, consumer spending and tourism
activity all declined sharply following the earthquake. The OCR was cut as
insurance to help limit these adverse effects. Confidence and consumer spending
have since shown signs of recovery, but many firms and households remain
adversely affected in Christchurch. To date, activity in the rest of the
country appears relatively unaffected, with housing market turnover and business
investment beginning to increase.
"Trading partner growth remains robust, helping push New
Zealand's export commodity prices higher. Along with relatively
favourable climatic conditions, the improved price outlook is supporting a
pickup in on-farm investment. Higher oil prices and the elevated level of the
New Zealand dollar are both unwelcome. They will have some dampening effect on
economic activity.
"Headline inflation is currently being boosted by recent increases in
indirect taxes. Annual inflation is expected to settle comfortably within the
target band once these tax increases drop out of the annual rate.
"Given the outlook for core inflation and continued economic disruption
stemming from the earthquakes, the current level of the OCR is likely to remain
appropriate for some time."
Media contact:
Mike Hannah
Head of Communications
Ph 04 4713671, 021
mike.hannah@rbnz.govt.nz