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RB leaves cash rate unchanged

As expected, Reserve Bank governor Don Brash left the official cash rate (OCR) unchanged at 5.75%, acknowledging both the strength of the domestic economy and the worsening outlook for the global economy.

Wednesday, August 15th 2001, 9:44AM

by Jenny Ruth

As expected, Reserve Bank governor Don Brash left the official cash rate (OCR) unchanged at 5.75%, acknowledging both the strength of the domestic economy and the worsening outlook for the global economy.

Brash says underlying inflation remains well within his zero to 3% target range and that the headline inflation rate, the consumer price index (CPI), should also move back towards the middle of that range by the middle of next year. The CPI rose 3.2% in the year ended June.

Nevertheless, that are risks to that "relatively benign" assessment, Brash says.

"Inflation could turn out to be more persistent than currently seems likely. There are an increasing number of indicators suggesting that the economy may be operating slightly above full capacity," he says.

If the CPI stays close to 4% there’s a risk inflation expectations may go up, "leading to adverse consequences for wage- and price-setting," he says.

Brash says businesses are confident about the outlook for their own activity, rural sector incomes are at their highest level in many years, employment intentions are at near-record levels, and there are strong signs of a pick-up in both confidence and activity in residential construction. That was previously one of the most sluggish parts of the economy, he says.

Given those factors, "we have no reason to date to regret the relatively cautious manner in which we have reduced the OCR in recent months."

If it weren’t for the risk that the international environment will turn out to be even weaker than assumed, "the current situation would point to an early increase in the OCR," Brash says.

"The flow of economic indicators from the United States, Japan, non-Japan Asia and Europe makes a deeper and more prolonged slowdown seem quite likely,’’ he says.

If that happens "there seems little doubt that the dis-inflationary pressures on New Zealand coming from overseas would intensify. As a result, inflation could fall into the bottom half of our target range and this would necessitate further easing of monetary policy."

Brash’s rhetoric surprised no one. The key 90-day bank bills, from which floating mortgage rates are set rose from 5.82% late yesterday to 5.83%.

« Allocate 15% to alternative investmentsSovereign takes regulation bull by the horns »

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 5.05 5.19 5.49
ANZ Special - 4.55 4.69 4.99
ASB Bank 5.80 4.75 4.99 5.29
ASB Bank Special - 4.39 4.69 4.99
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.59 4.69 5.09
BNZ - Std, FlyBuys 5.90 4.99 5.29 5.59
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.45 5.50 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 5.00 5.20 -
Housing NZ Corp 5.79 4.75 4.99 5.29
HSBC Premier 5.79 4.19 4.29 4.89
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.95 5.15 5.59
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.55 4.65 5.09
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special 5.00 - 4.75 -
SBS Bank 5.89 4.99 5.19 5.59
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.59 4.69 5.09
Sovereign 5.90 4.75 4.99 5.29
Sovereign Special - 4.39 4.69 4.99
The Co-operative Bank - Owner Occ 5.75 4.55 4.69 4.99
The Co-operative Bank - Standard 5.75 5.05 5.19 5.49
TSB Bank 5.80 4.80 5.15 5.45
TSB Special - 4.55 4.69 4.99
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.99 5.19 ▼5.44
Westpac - Capped rates - 5.26 5.36 -
Westpac - Offset 5.95 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 4.59 4.74 ▼4.94
Median 5.82 4.78 4.99 5.29

Last updated: 13 October 2017 9:47am

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