New Zealand OCR Raised to 2.75%

June 10, 2010 New Zealand Finance

The treasury cash register is brokenThe Reserve Bank of New Zealand has raised the nation’s Official Cash Rate (OCR) to 2.75 percent.

On June 10th the Reserve bank of New Zealand (RBNZ) announced the first change in New Zealand’s OCR since April 30th 2009. At the latest OCR review, the rate was increased by 0.25 percent to a new level of 2.75 percent. The rate has remained unchanged for the last 8 OCR review sessions.

Alan Bollard, Governor of the RBNZ, explained the change, saying, “…the economy has entered its second year of recovery with growth becoming more broad-based.” The alteration has also been attributed to the strong recovery of the New Zealand’s key economic trading partners, especially the Asia region, Australia, and the US. Local economists expect several more upwards adjustments throughout the 2010 year, barring an unexpected downturn in the global financial situation. The Governor added that the OCR will be reviewed and adjusted in line with the withdrawal of Government stimulus measures, as dictated by the economic environment.

According to Alan Bollard, economic growth is expected to reach 3.5 percent throughout the 2010 and 2011 years. The growth is attributed to an improved demand for export goods, a rising labor market, along with residential and business investment.

Photo by Frederic Poirot