New Zealand increases rates to 3%

by Richard Kilner

Story link: New Zealand increases rates to 3%

The Reserve Bank of New Zealand has elected to increase the nation’s Official Cash Rate (OCR) by 25 basis points, to 3%.

Governor Alan Bollard has said that trading partner growth has improved more than expected, but that future prospects were now weaker than earlier forecasts suggested.

It is the second recent increase in the New Zealand interest rate, and follows an earlier 25 basis point rise in June.

Previously, the rate had remained at 2.5% for just over a year.

Earlier this month both the Bank of England and the European Central Bank left the interest rates of the United Kingdom and eurozone unchanged (at 0.5% and 1% respectively).

In both monetary areas the interest rates have been held steady at their lowest ever level for more than a year, although some are now suggesting that rates in the UK may rise before the end of 2010.