Official Interest Rate Cut

September 12, 2008 New Zealand Finance  No comments

The Official Cash Rate (OCR) was cut from 8 percent to 7.5 percent on the 11th of September by Reserve Bank Governor Alan Bollard.

Although a cut in the OCR was predicted, most experts expected it to be a quarter of a percentage point. The substantially larger cut has been a surprise to the industry. Dr Bollard justified this move by citing what he called a “marked” slowdown in the local economy and a possible deterioration in the general global economy.

This is only the second time in five years that the OCR has been lowered. The last was in July, with a lowering of a quarter of a percentage point, from 8.25 percent.

It is expected that the move will result in a peak in inflation around September at a level of 5 percent, followed by a general downward trend in inflation figures.