By Central Bank News
The central bank of New Zealand kept its benchmark Official Cash Rate (OCR) unchanged at 2.5 percent, as widely expected, saying risks to the global economic outlook had improved and the domestic economy continued to expand at a modest pace.
“The global economy remains fragile, with further recovery heavily dependent on policy implementation,” said Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler after his first policy meeting after taking over from Alan Bollard.
“That said, market sentiment has improved from earlier in the year, suggesting the risks to the global outlook are more balanced,” he added in a statement.
New Zealand economy expanded by an annual rate of 2.6 percent in the first quarter, up from 2.4 percent, helped by housing market activity and reconstruction following the Canterbury earthquake.
Offsetting these factors were fiscal tightening and the high New Zealand dollar, the RBNZ said.
The inflation rate fell further to 0.8 percent in the year to September, continuing a declining trend since the rate hit 5.3 percent in the second quarter of 2011.
But the central bank said it expects inflation to head back towards the middle of its target range. The RBNZ targets annual inflation of 1-3 percent and has held its OCR rate steady since February 2011.
