No hurry to fix after OCR announcement
Bollard left his official cash rate (OCR) unchanged at 3% and said while it is likely to rise modestly over the next two years, he won't be moving it "until the recovery becomes more robust and underlying inflationary pressures show more obvious signs of increasing."
Bollard specifically referred to weak household spending, weakening housing market activity and the prospect house prices "may decline a little further in the near term," dashing hopes raised by Quotable Value's suggestion earlier this week that house prices may be stabilising.
"The main thing the Reserve Bank is responding to is weaker than expected activity through the middle six months of this year," says Brendan O'Donovan, chief economist at Westpac.
"They've pushed out the next rate hike to be in quarter three 2011 rather than quarter one," O'Donovan says.
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