Monetary Conditions

Official Cash Rate stays at 2.5 percent

Thursday April 26, 2012 Jason Leung-Wai
Alan Bollard believes it is prudent to hold the OCR at 2.5 percent, where it has remained since March 2011.

He considers that inflation has settled near the middle of the Bank’s target range expectations ‘have fallen’. In the march 2012 quarter the CPI was up 0.5 percent and, on the year, the CPI was up 1.6 percent.

 

The Reserve Bank suggests that the domestic economy is showing signs of recovery; and that a number of central bank’s have implemented policy that has boosted global confidence. Further, the sustained strength of the New Zealand dollar has reduced the need for future increases in the OCR.
Consensus amongst commentators was for the OCR to remain unchanged this time. However, it is also anticipated by most that the next move, when it happens will be up. BERL does not expect this move to happen this year, particularly as the economy - domestic and global - remains precariously balanced.