Frustration at the lack of action from both the Reserve Bank
and the Government in dealing with the country's monetary
policy boiled over yesterday as the official cash rate stayed
at 2.5%.
Bank margins appear to be coming under pressure as Reserve
Bank governor Alan Bollard yesterday announced he was keeping
the official cash rate (OCR) at 2.5%.
Reserve Bank governor Alan Bollard seemed to be calling the
bluff of the currency markets with his hints the central bank
would reassess the outlook for monetary policy settings
should the exchange rate stay high.
New Zealand businesses are in desperate need of some good
news, something more than a plethora of press releases
commenting on business, consumer and investor confidence.
Calls are continuing for the Reserve Bank to include a
currency target in its decision-making process when it
decides on how and when to move its official cash rate.
The Reserve Bank is expected to leave its official interest
rates at the current low of 2.5% when it meets on Thursday
but the strength of the New Zealand dollar will be of some
concern to governor Alan Bollard.
The Reserve Bank is expected to be able to take a more
relaxed view of inflation in the early part of this year and
leave interest rates unchanged for longer.
