The Reserve Bank of New Zealand has cut the Official Cash Rate by an unprecedented 100 basis points to 6.5%, in line with market expectations. Reserve Bank Governor Alan Bollard said "ongoing financial market turmoil and a deteriorating outlook for global growth have played a large role in shaping today's decision." Bollard said growth would be slower than the 0.5% previously forecast for 2008/2009 (March year) by the Reserve Bank in its September Monetary Policy Statement. He also said inflation would return to the 1-3% target band by the middle of 2009, which is about a year earlier than forecast in September. "Should the outlook for inflation evolve as projected, we would expect to lower the OCR further," Bollard said, adding however that the timing and extent of the OCR cuts would depend on evidence of easing domestic inflationary pressures as well as the global financial situation.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.