New Zealand keeps rates at 2.5%

by Richard Kilner

Story link: New Zealand keeps rates at 2.5%

The Reserve Bank of New Zealand has elected to leave its official cash rate (OCR) unchanged at 2.5%.

Governor Alan Bollard has stated that the immediate economic future remains weak, but that there were signs that the global situation was beginning to steady itself.

The governor went on to forecast resumed growth in New Zealand towards the end of the year but added that the recovery would be gradual.

Earlier in the month the Reserve Bank of Australia left its own interest rates unchanged at 3%, a pattern followed by the Bank of England (0.5%) and the European Central Bank (1%).

In both Australia and New Zealand, rates although significantly lower than at the start of the financial crisis, remain substantially higher than those in other Western economies, especially the UK where usual monetary policy methods (low interest rates) have been augmented by quantitative easing to the tune of £125bn.