While the Reserve Bank isn't expected to cut interest rates just yet, most economists now think a rate cut is imminent.
Tuesday, April 22nd 2003, 12:48PM
by The Landlord
Reserve Bank governor Alan Bollard will announce his latest decision on whether to move the Official Cash Rate (OCR) on Thursday. The OCR has stood at 5.75% since July last year and is the highest among industrialised countries.
Macquarie Bank thinks it will be Bollard's hardest call yet since his appointment in August last year.
It questions whether the central bank is really taking a more growth tolerant approach in line with the new Policy Targets Agreement Bollard and Finance Minister Michael Cullen signed last year.
"The time is approaching for the RBNZ to look through short-term inflation prospects and act by cutting interest rates to stimulate real GDP growth," Macquarie says. Economists now expect annual economic growth will slip below 3% this year compared with 4.4% last year.
