By Central Bank News
The Reserve Bank of New Zealand kept its benchmark Official Cash Rate (OCR) unchanged at 2.5 percent, as expected.
The central bank of New Zealand said the outlook for the country’s trading partners had worsened and it was monitoring the developments in the euro area carefully. Higher agricultural production and the weaker global economic outlook had driven down New Zealand’s export commodity prices, which would weigh on the country’s growth in the future.
“Offsetting these negative influences, housing market activity continues to increase, supported by recent reductions in mortgage interest rates,” the bank said, quoting Governor Alan Bollard.
“In addition, repairs and reconstruction in Canterbury are expected to substantially boost construction sector activity in coming quarters. Aggregate GDP growth is projected to pick up slightly to just over 3 percent next year. Given this economic outlook, inflation is expected to settle near the mid-point of the target range.
“It remains appropriate for monetary policy to remain stimulatory, with the OCR being held at 2.5 percent,” the bank said.
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