As expected Reserve Bank governor Alan Bollard left his benchmark official cash rate (OCR) unchanged but warned of upside inflation risks and that there is no scope for easing interest rates in the foreseeable future.
Monday, June 20th 2005, 6:42AM
by The Landlord
"Dr Bollard basically followed the script. He delivered a statement on the hawkish side of the spectrum," says Sean Comber, an economist at ANZ/National Bank.
If it hadn’t been for weaker data over the last month, Bollard could have raised rates and he still might if there’s any strong data over the next couple of months, he says.
The key message Bollard was trying to convey is that interest rates aren’t going down any time soon, despite market expectations that they will either in the December or March quarters, Comber says.
With the interest rate futures market virtually unchanged from before the monetary policy statement was released, it seems the market remains sceptical about Bollard’s message.
