The Reserve Bank has avoided pulling the trigger on raising the official cash rate (OCR) to slow the economy – but has indicated it is simply a matter of time.
At its official announcement today it left the rate at 2.5% – avoiding any upward push in interest rates.
Governor Graeme Wheeler says the economy currently has significant momentum.
“Growth is expected to continue around this rate over the coming year,” Wheeler says.
Wheeler notes inflationary pressures are rising – and this will need action soon.
“In this environment, there is a need to return interest rates to more-normal levels. The Bank expects to start this adjustment soon.”
“The bank remains committed to increasing the OCR as needed to keep future average inflation near the 2% target mid-point,” Wheeler says.
“The scale and speed of the rise in the OCR will depend on future economic indicators.”
