NZIER predicts further rises in interest rates by 0.5% by end of year, as inflat

Tuesday 31 August 2004

A private economic research group predicts interest rates will rise by half a percentage point by the end of the year as inflation looks set to breach the Reserve Bank's target band.

By The Landlord

The Institute of Economic Research's quarterly forecast shows that that alongside buoyant economic growth, New Zealand has experienced high employment growth, moderate inflation, fiscal surpluses and a better than average current account deficit.

Increased trade was a key factor spurring on growth, which prevented strong domestic demand being accompanied by a blowout in the current account deficit.

The NZIER is forecasting that the rapid rate of economic expansion will slow to 2.5 percent in the March 2006 year, before picking up to 3.0 percent in the following two years.

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