Thursday, March 8, 2012

RBNZ Keeps OCR On Hold At 2.50%

The Reserve Bank of New Zealand maintained the Official Cash Rate (OCR) steady at 2.50%, noting the impact of global developments.  The Bank Said: "While helping contain inflation, the high value of the New Zealand dollar is detrimental to the tradable sector, undermines GDP growth and inhibits rebalancing in the New Zealand economy. Sustained strength in the New Zealand dollar would reduce the need for future increases in the OCR. Given the medium-term outlook for inflation, it remains prudent to hold the OCR at 2.5 percent."

Previously the Bank also held the OCR unchanged at 2.50%, while the Bank cut the rate by 50 basis points in March this year, following the Canterbury earthquake.  New Zealand reported consumer price inflation of 1.8% in Q4 2011, down from 4.6% in Q3, compared to 5.3% in Q2, 4.5% in Q1, and 4.0% in Q4 of 2010, and within the official inflation target of 1-3%.  

The New Zealand economy grew 0.8% q/q in Q3 (0.1% in Q2, 0.9% in Q1), placing it up 1.9% (1.1% in Q2, 1.4% in Q1) on an annual basis.  The New Zealand dollar (NZD) is up about 10% against the US dollar over the past year, having touched all new highs close to 0.88 in July/August last year, meanwhile the NZDUSD last traded around 0.82.


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