OCR reduced to 5%

Thursday 4 December 2008

The Reserve Bank today reduced the official cash rate (OCR) from 6.5% to 5.0%.

By The Landlord

Reserve Bank Governor Alan Bollard commented that "ongoing financial market turmoil and the marked deterioration in the outlook for global growth have played a large role in shaping today's decision.  Activity in most of our trading partners is now expected to contract or grow only
very slowly over the next few quarters.  

"Economic activity in New Zealand will be further constrained as a result, compared with our view in October. 

"Inflation is abating here and overseas as a consequence of these developments. We now have more confidence that annual inflation will return comfortably inside the target band of 1 to 3% some time in the first half of 2009 and remain there over the medium term.  However, we still have concerns that domestically generated inflation (particularly local body rates and electricity prices) is remaining stubbornly high.


"Today's decision brings the cumulative reduction in the OCR since July to 3.25%, and takes monetary policy to an expansionary position.
Given recent developments in the global economy, the balance of risks to activity and inflation are to the downside.  Thus it is appropriate to deliver this reduction quickly to support the economy and keep inflation from falling below the target band. 

"Monetary policy is working together with the depreciation of the New Zealand dollar and the fiscal stimulus now in train, to provide substantial support to demand over the period ahead and to create the conditions for some rebound in growth as global conditions improve.
"To ensure the response we are seeking, we expect financial institutions to play their part in the economic adjustment process by passing on lower wholesale interest rates to their customers.

"Further movements in the OCR will be assessed against emerging developments in the global and domestic economies and the response to policy changes already in place." 


Commenting is closed

Property News

Tenancy reform submissions due March 25

Worried about the government’s tenancy law reforms? You’d better speak up soon because there’s under a month to make a submission on the legislation.

House Prices

Regions lead the price growth pack

Provincial markets stole the asking price spotlight from the main centres in January, according to the latest Trade Me Property Price Index.

Commercial

Headwinds for the commercial market

Tightening credit conditions could impact on New Zealand’s booming commercial property market, according to the Property Council’s chief executive.

Mortgages

Heartland launches reverse mortgages for investors

Heartland has expanded its reverse mortgage business and will now lend against investment properties and second homes, as the product becomes more popular in New Zealand.

Site by PHP Developer