The Reserve Bank of New Zealand Governor, Alan Bollard, said yesterday that he wont be reducing the countrys key interest rate from its record high value in 2008, because the national inflation still remains the major concern.
In the fourth quarter of 2007 New Zealand CPI increased 3.2% above the central banks target of 3.0%. In the same time economy grew 3.7% its best expansion since 2004 and above the median forecast by the market analysts.
As Bollar said, the current 8.25% key interest rate is an appropriate level that is able to hold down the inflation and is still low enough to allow the countrys economy to go up at a desired pace. Nevertheless, he expects the growth to moderate slightly this year as the drought may weaken farming sector, the lack of liquidity can hurt the real estate sector and the overvalued currency diminishes the exporters revenues.
NZD/USD rose from 0.7903 to 0.7972 this week, gaining almost 0.9% but it has been moving generally sideways on Forex during last 30 days.
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