New Zealand keeps 2.5% interest rate

by Richard Kilner

Story link: New Zealand keeps 2.5% interest rate

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

Governor Alan Bollard has stated that the country’s economy is recovering in line with expectations, and is forecast to improve throughout 2010.

Bollard added that whilst 4% growth was expected in 2010 this was a lower rate than had been seen in prior recoveries.

The OCR has been at 2.5% for the best part of a year now, and New Zealand is one of numerous central banks to have kept the low interest rates that resulted when the financial crisis and global recession prompted widespread rate cuts.

In the UK, the record low 0.5% interest rate has been in place for a year, and the 1% eurozone rate is similarly long-lived.

However, the Reserve Bank of Australia has bucked the trend, adding 25 basis points this month to increase Australia’s interest rate to 4%.