Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

RBNZ MPS: OCR unchanged at 6.75 per cent

OCR unchanged at 6.75 per cent

The Reserve Bank has left the Official Cash Rate (OCR) at 6.75 per cent.

Reserve Bank Governor Alan Bollard said: "Since our June Monetary Policy Statement, economic indicators have broadly confirmed the slowdown in activity that commenced in the second half of 2004. The slowdown has been concentrated in sectors such as manufacturing and tourism that have been exposed to the high exchange rate. The non-traded sectors of the economy on the other hand, such as household and business services and construction, have maintained their high growth of recent years. The housing market in particular has remained strong, underpinning consumption growth. Reflecting the slow pullback in domestic demand, capacity and labour shortages are expected to persist well into 2006.

"New developments in oil prices have made the future more uncertain. Oil prices have surged in recent months and are now 20 per cent higher than projected in June, some 60 per cent up from the end of 2004. As a consequence, headline CPI inflation is now forecast to approach 4 per cent over the next few quarters before returning below 3 per cent by early 2007. Monetary policy will not attempt to offset the unavoidable first-round price effects of the oil price spike. However, it will be used to resist any flow-through to ongoing price and wage inflation. Further out, the higher oil prices are expected to have a dampening effect on both world and domestic economic activity, thus taking some pressure off monetary policy in the medium-term.

"Fiscal policy is also adding to uncertainty. The shape and economic impact of new post-election policies is not clear at this point. However, it does appear likely that fiscal policy will become more expansionary in the period ahead.

"Right now, it is too early to make a call on the relative strength of the emerging cross-currents and how these will translate into medium-term inflation pressures. It will be several months before the persistence and global impact of the oil shock become more apparent. A similar period could be needed for the fiscal outlook to be clarified. We are concerned, however, that the risk of higher medium-term inflation has increased. Consequently, further monetary policy tightening may still prove necessary to ensure inflation is kept within the 1 per cent to 3 per cent target band on average over the medium-term. Certainly there remains no prospect of a cut in the OCR in the foreseeable future."

ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>

Commerce Commission: Cartel Conduct Now Punishable By Up To 7 Years’ Jail Time

Cartel conduct can now be punished with a term of imprisonment of up to 7 years, after the Commerce (Criminalisation of Cartels) Amendment Act 2019 came into effect today. Cartel conduct includes price fixing, market allocation and bid rigging (see ... More>>

Stats NZ: Auckland Population May Hit 2 Million In Early 2030s

Auckland’s population may rise from about 1.7 million currently to 2 million by early next decade, Stats NZ said today. “Auckland will likely have the highest average annual growth of New Zealand’s 16 regions over the next 30 years, from ... More>>

Air New Zealand: Business Travellers Return To The Skies In Record Numbers

After a year of talking to a computer, Kiwis are leaving the office to re-connect with their clients, suppliers, and staff. New figures released by Air New Zealand show domestic business and corporate travel has defied global trends by returning ... More>>

PwC: Outcome Of Review Into Air New Zealand Gas Turbines Business

Air New Zealand has received the report into its Gas Turbines business from independent external advisers PwC. Air New Zealand Chairman Dame Therese Walsh says the report identified a range of effective controls in the Gas Turbines revenue contracting ... More>>

LPG Association: Renewable LPG Achieves Emissions Budgets With No Need To Ban New LPG Connections

Renewable LPG can supply New Zealand’s LPG needs and achieve the emissions reductions proposed by the Climate Commission without the need to ban new connections, a new study shows. The investigation, by leading consultancy Worley, was prepared for the ... More>>

Commerce: House Values Continue To Climb As New Government Measures Announced

The Government’s new initiatives to quell the rocketing housing market were announced last week, just as house prices hit a new high for the end of March. The average value increased 7.8% nationally over the past three-month period, up from the 6.8% ... More>>