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The Reserve Bank Governor, Alan Bollard, lsat week kept the OCR rate unchanged at 2.5%. The Reserve Bank statement made it clear that the OCR level will remain at 2.5% or lower until the latter part of 2010. There was also an indication that if the New Zealand dollar and wholesale ocrinterest rates remained at high levels, the OCR would be expected to be lowered over the next quarter. There was also a message in there for the property and finance markets. With average pricing beginning to increase across New Zealand, the indication was to re-enforce the housing market but to ensure that affordability remained for all New Zealanders and that banks continue to have enough liquidity to allow borrowing at a level which continues to keep the market flowing. He went onto say the economic outlook remains weak however New Zealand is slightly sheltered from the overall global recession through its exports and its partnership with Australia. The graph shows since July 2008 that interest rates have reduced from 8.5% to 2.5% and potentially expected to go lower.

Source ASB Economic Update

Written by Ray White New Zealand

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