RBNZ Holds Official Cash Rate at 2.50%

The Reserve Bank of New Zealand kept the Official Cash Rate (OCR) steady at 2.50%, noting the impact of global developments.  The Bank Said: "If recent global developments have only a mild impact on the New Zealand economy, it is likely that the OCR will need to increase. For now, given the recent intensification in global economic and financial risks, it is prudent to continue to hold the OCR at 2.5 percent."

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 5.3% in Q2 this year, up from 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 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.

www.CentralBankNews.info