9 June 2005
OCR unchanged at 6.75 per cent
The Reserve Bank has left the Official Cash Rate (OCR) unchanged at 6.75 per cent.
Speaking at the release of the Reserve Bank's June 2005 Monetary Policy Statement, Reserve Bank Governor Alan Bollard
said: "Our current review confirms what we said in the March Statement and again at the April OCR review. Activity
remains strong across many parts of the economy and inflation pressures remain persistent. Several years of strong
growth have led to productive resources becoming stretched, with capacity utilisation and measures of labour shortages
remaining at or near record highs.
"However, there is sufficient evidence that the economy is slowing, and that past policy tightenings are yet to have
their full effect, for us to leave policy on hold at this point.
"While many businesses see more difficult trading conditions ahead, activity and inflation pressures in some sectors are
proving stronger than anticipated. Export prices for some commodities have edged up in recent months. Household spending
and housing market activity have remained firmer than expected. Non-residential construction and business investment
look likely to be sustained at high levels in the near-term. "Overall, we assess that the balance of inflation risks
remains on the upside. We base this view on the ongoing growth in debt-financed household spending; and on increases in
costs - of labour, energy and freight - that are now putting considerable pressure on margins and prices.
"With inflation projected to remain around 3 per cent through most of this year and next, a firm policy stance will be
required for some time. We will be watching closely to see if inflation pressures are contained, and further tightening
in monetary policy would likely be required if there are upside surprises to the inflation outlook. Certainly, there is
no scope for an easing in policy in the foreseeable future."
You can view the Monetary Policy Statement at the following link:
ENDS