Bollard holds rates steady - no hike till late 2010

Reserve Bank of New Zealand Governor Alan Bollard held the official cash rate at 2.5 per cent today, as expected, and said the strong kiwi dollar was a threat to a sustained recovery, ruling out a rates increase before the second half of 2010.

"Business profits are under pressure because of the low level of activity and the elevated New Zealand dollar," Bollard said in Wellington today.

"If the exchange rate was to continue its recent appreciation and/or the recovery in house prices were to undermine the improvement in household savings, then the sustainability of the present recovery will be brought into question."

He retained the bank's easing bias, saying there's still a chance rates will be cut again because of the fragility and uncertainty in the global economic recovery. Rates are likely to remain low until the second half of 2010, he said, reiterating comments from his last review.

The kiwi was little-changed at 69.68 US cents, from 69.56 cents immediately before the release, having initially dropped after the statement. The trade-weighted index was at 63.75 from 63.68 before the statement.

To read the full NZ Herald article click here

Posted: 10 Sep 2009

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