Bollard's low OCR likely to refire housing market
Earlier, Bollard left his OCR unchanged at 2.5% and said he expects to keep it there until the second half of 2010.
"Because the Reserve Bank's committing to keep rates low for such an extended period, we're in for a double digit spike in house prices," O'Donovan says, adding house prices rose 4% in the last three months.
Bollard expressed concerns about the composition of renewed growth and particularly about a credit-fuelled rebound in the housing market. O'Donovan says higher interest rates is the solution to such problems.
"Instead they're indicating to households there's a strong likelihood short rates will be low until the second half of next year," he says.
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