The Reserve Bank has decided to leave the official cash rate at 2.5% –
meaning stable rates for vehicle finance – despite a strong local
economy.
The bank has indicated that next year the rate will need to rise, however.
Reserve
Bank governor Graeme Wheeler says economic recovery for the rest of the
world is patchy, but here, things are looking good.
“The
recovery in the United States and other major advanced economies
remains patchy,” says Wheeler. “Nevertheless, world prices for New
Zealand’s export commodities are very high.
“The New Zealand
economy is estimated to have grown by more than 3% in the year to
September,” Wheeler says. “Household spending is rising, and
reconstruction in Canterbury is being reinforced by a broader rise in
construction in Auckland and across the country more generally.
“This will support economic activity and start to ease the housing shortage.”
He says the bank hopes its moves to raise loan to value ratios will also ease housing demand.
“Although we expect to keep the OCR unchanged in 2013, OCR increases will likely be required next year,” Wheeler says.
“The
extent and timing of the rise in the policy rate will depend largely on
the degree to which the momentum in the housing market and construction
sector spills over into broader demand and inflation pressures.”
