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Central Bank Outlook: New Zealand: Rates unchanged, extended policy pause.
- The Reserve Bank of New Zealand decided to leave the Official Cash Rate (OCR) unchanged at 2.50%, after similar decisions in its nine previous meetings.
- The accompanying statement by Governor Bollard began by noting that the domestic economic outlook had worsened since the last Monetary Policy Statement in March, on mounting downside risks in the Eurozone. However, this is offset somewhat by increases in housing market activity and the expected recovery from reconstruction efforts in Canterbury later this year.
- GDP is forecasted to pick up from the 0.4% Q/Q pace seen in Q1 this year to peak at 0.9% in the first half of 2013. Inflation is also expected to pick up from the current 1.1% Y/Y pace to 2.2% in 2013 Q1. Of note, the forecasts do not incorporate the risks that conditions in the Eurozone may deteriorate more markedly.