NZIER picks extra rise in cash rate

Wednesday 13 October 2004

A survey showing businesses running at their fastest rate in 43 years makes more interest-rate rises likely, says the Institute of Economic Research.

By The Landlord

The Reserve Bank had been expected to lift official cash rates to 6.5 per cent at the end of this month, but the business opinion survey by the NZIER points to another rise later.

Its quarterly survey, out yesterday, showed the business community was slightly brighter overall in the September quarter, though still in gloomy territory despite a strong economy.

A net 16 per cent of firms surveyed expected conditions to deteriorate, compared with 20 per cent of respondants in the June quarter, NZIER senior economist Doug Steel said.

That continuing gloom may reflect Reserve Bank governor Alan Bollard's lifting interest rates twice in the past quarter to 6.25 per cent, crude oil prices rocketing 40 per cent to more than $US50 a barrel and the 5 per cent rise in the exchange rate.

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