The Reserve Bank of New Zealand kept the Official Cash Rate (OCR) on hold at 2.50%, noting the impact of global developments. The Bank Said: ""Given the ongoing global economic and financial risks, it remains prudent to continue to keep the OCR on hold at 2.5 percent for now. However, if global developments have only a mild impact on the New Zealand economy, it is likely that gradually increasing pressure on domestic resources will require future OCR increases."
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 4.6% in Q3 this year, compared to 5.3% in Q2, 4.5% in Q1, and 4.0% in Q4 of 2010, and above the official inflation target of 1-3% as short term factors such as tax increases caused a spike in prices.
The New Zealand economy grew 0.1% q/q in Q2 (0.9% in Q1), placing it up 1.5% (1.4% in Q1) on an annual basis. The New Zealand dollar (NZD) is up about 6% against the US dollar so far this year, having touched all new highs close to 0.88, meanwhile the NZDUSD last traded around 0.82.
by: Central Bank News