Special Report: RBNZ holds OCR at 2.5% and repeats middle of 2010 outlook for first hike

The Reserve Bank has left the Official Cash Rate (OCR) on hold at 2.5% and has repeated that it wont be increasing the OCR until the middle of 2010. The Reserve Bank is scheduled to make OCR announcements on June 10 and July 29. The OCR has been on hold since April 30 last year.

Governor Alan Bollard said the economy was recovering broadly as expected and growth was expected to pick-up further through 2010. However, consumer spending and business investment was more subdued than in previous recoveries as indebted households and corporate increased saving and reduced debt, he said.

Some concern about decisions on property taxation in the May 20 budget budget also appeared to have slowed activity in the market for existing homes, the Reserve Bank said. It forecast stagnant real house prices over the next couple of years.

The Reserve Bank also pointed in its Monetary Policy Statement to likely one-off increases in prices later this year to come from increases in ACC levies and the Emissions Trading Scheme (ETS). It did not refer to an expected GST increase to 15% from 12.5%, but said it would look through the impact of the ETS as long as it did not change inflation expectations.

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[waldentree]

GST, Emissions Trading, ACC all rising. What do they have in common? They are all effectively taxes. Only the government can raise prices during a deflationary depression. Nice work if you can get it.

[keithholden]

So keep your deposits short term, so when interest rates rise you can get higher interest on your deposits?