NZ Central Bank OCR Remains at 2.5%

Even if the debt crisis in the eurozone is far away, New Zealand is not excluded from feeling its effects. Spain has two regions this week announced they would be needing bail out from the central government.

Trading partners of New Zealand and The New Zealand Reserve bank are not watching the region like a hawk for any sign of downturn. The official cash rate is now at 2.5 percent. Governor Alan Bollard says that New Zealand’s trading partners from their point of view looks weak.

The OCR last year dropped to 2.5 percent sometime in March to help the economy bounce back after the February Christchurch earthquake.

Inflation has slowed down to 1 percent this year which ended in June 30, which is well within the target range of the central bank: one percent to three percent. Dr. Bollard expects that the annual inflation will settle somewhere near the mid-point of the range targeted of the medium term.

According to Dr. Bollard, the economic future of New Zealand remains on track as described in the monetary policy statement (MPS) released in June.

The peak of New Zealand growth based on the MPS will be in 2014. It is expected that the housing sector will see more action as time passes by, as well as seeing the rebuilding of Canterbury.