The New Zealand Official Cash rate will not be changed today, as the Reserve Bank remains cautious over the potential for economic downturns in Europe.
On June 14th the Governor of the Reserve Bank Alan Bollard announced that the New Zealand Official Cash Rate would be left unchanged at the current level of 2.50 percent.
The Governor explained that the decision to leave the OCR at 2.5 percent was because “…New Zealand’s economic outlook has weakened a little since the March Monetary Policy Statement“.
According to Alan Bollard, New Zealand has recently seen ongoing deterioration in its economic indicators, and there is still some risk of further economic instability in the euro area. He explained that the economic unrest could lead an financial downturn amongst New Zealand’s key economic partners.
The price for New Zealand commodities has also fallen, mainly due to increased national production and a decrease in worldwide demand.
However, despite some economic downturns, there has been evidence of increases in activity on the housing market, and GDP growth is expected to exceed 3 percent in 2013. Inflation is forecast to stay within the acceptable range of the Reserve Bank’s targets.