New Zealand keeps rates at 2.5%

by Richard Kilner

Story link: New Zealand keeps rates at 2.5%

The Reserve Bank of New Zealand has decided to hold the Official Cash Rate (OCR) at 2.5%.

Governor Alan Bollard has expressed the view that the worst of the economic decline may be over, with the first signs of an approaching, sporadic recovery in evidence.

However, Governor Bollard has warned that the medium term prospects still look weak with limited scope for a rapid improvement in employment or investment.

The decision is made on the same day as the Bank of England’s Monetary Policy Committee chose to keep rates at 0.5%, the lowest in the institution’s history.

Central banks around the developed world appear to be collectively holding their breath and waiting to raise interest rates, after months of keeping them at relatively low levels.

The European Central Bank and the Reserve Bank of Australia have both kept rates steady, with the Bank of Israel bucking the trend by adding 25 basis points in September.