OCR Unchanged at 2.5 Percent
December 8, 2011 New Zealand Finance
The Reserve bank of New Zealand has issued its latest official cash rate announcement, saying that it would be maintained at 2.5 percent.
On December 8th the reserve Bank Governor Alan Bollard the quarterly Monetary Policy Statement, saying that the New Zealand Official Cash rate (OCR) will remain unchanged at 2.5 percent for another four months. The OCR has not been changed since it was dropped by 0.5 percent on March 10th 2011.
The Governor explained that the September OCR Statement had suggested that the OCR would remain at 2.5 percent unless a dramatic improvement was seen in the economic conditions around the world. He stated that there was no evidence of any strong economic pick up, and market conditions around the world were softening. The Governor added that the world was seeing an “…unusual degree of uncertainty around global conditions.”
Allan Bollard pushed back the prospect of future OCR hikes, saying that there was currently too much market uncertainty and economic variables to predict when the OCR may be raised again.
Prior to the OCR announcement national economic experts and banks were expecting the rate to be hiked to 3 percent, with the price of the New Zealand dollar reflecting the expectation.
Some economist have already come forward and suggested that the latest OCR announcement indicates that the rate may be cut in 2012, if global economic conditions do not improve dramatically.