Interest rate hike now in sight
"We continue to expect the New Zealand economy to recover in line with or slightly faster than our March statement projections."
"We expect to begin removing policy stimulus over the coming months, provided the economy continues to evolve as projected."
Bollard has kept the OCR at a record low for 12 months after he slashed interest rates to revive the economy from its worst recession in 18 years. The Reserve Bank forecasts the 90-day bank will rise to 3.3% in the September quarter, and traders have been split over whether Bollard will tighten monetary policy in June or July after first-quarter inflation came in at 0.4%, below market expectations.
"Broadly, the message will be the economy tracked as expected and the RBNZ sees sufficient evidence of a recovery to carry out its plan for normalisation," said Imre Speizer, markets strategist at Westpac Banking Corp. before the announcement. "Any meeting after this one could result in a rate hike."
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