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OCR Unchanged 2.5 percent
NEWS RELEASE
Date 26 January 2012
OCR unchanged at 2.5 percent
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: “Since the time of the December Statement, financial market sentiment has improved slightly, with increased liquidity in European financial markets. However, the global economy remains fragile and risks to the outlook remain.
“World prices for New Zealand’s export commodities have remained elevated but the recent appreciation of the New Zealand dollar is reducing exporters’ returns. The European debt crisis has also increased the cost of international funding, which will likely pressure funding costs for New Zealand banks over the coming year.
“In the domestic economy we continue to see modest growth. Over recent months there have been signs of a limited recovery in household spending and the housing market. Further ahead, repairs and reconstruction in Canterbury will also provide a significant boost for an extended period, though there may be further delays resulting from the aftershocks.
“Reassuringly, inflation pressures have remained well contained. Inflation has declined and now sits below 2 percent.
“Given ongoing uncertainty around global conditions and the moderate pace of domestic demand, it remains prudent to keep the OCR on hold at 2.5 percent.”
In reality though, given the state of the world economies and the European crises I expect we will see this remain stable for most of this year. If there are further natural disasters, this again could hold these rates down allowing everyone to recover. However, the pressure on the New Zealand banks to make money from an increasing expensive cash raising exercise could see the actual costs of borrowing increase, especially for business. Remember they only make $millions of profit and they will be pressured by the shareholders to continue doing so.
They are already squeezing the man on the street for more. I believe ANZ raised it's standard home loan application fee from $250 to $500. Was that because it is more expensive for them to process the loan? NO it was because there are less borrowers so they have to recoup their money from somewhere. For this bank the "cost" of processing personal loans (as with the others) has actually decreased over the years.
Date 26 January 2012
OCR unchanged at 2.5 percent
The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.
Reserve Bank Governor Alan Bollard said: “Since the time of the December Statement, financial market sentiment has improved slightly, with increased liquidity in European financial markets. However, the global economy remains fragile and risks to the outlook remain.
“World prices for New Zealand’s export commodities have remained elevated but the recent appreciation of the New Zealand dollar is reducing exporters’ returns. The European debt crisis has also increased the cost of international funding, which will likely pressure funding costs for New Zealand banks over the coming year.
“In the domestic economy we continue to see modest growth. Over recent months there have been signs of a limited recovery in household spending and the housing market. Further ahead, repairs and reconstruction in Canterbury will also provide a significant boost for an extended period, though there may be further delays resulting from the aftershocks.
“Reassuringly, inflation pressures have remained well contained. Inflation has declined and now sits below 2 percent.
“Given ongoing uncertainty around global conditions and the moderate pace of domestic demand, it remains prudent to keep the OCR on hold at 2.5 percent.”
In reality though, given the state of the world economies and the European crises I expect we will see this remain stable for most of this year. If there are further natural disasters, this again could hold these rates down allowing everyone to recover. However, the pressure on the New Zealand banks to make money from an increasing expensive cash raising exercise could see the actual costs of borrowing increase, especially for business. Remember they only make $millions of profit and they will be pressured by the shareholders to continue doing so.
They are already squeezing the man on the street for more. I believe ANZ raised it's standard home loan application fee from $250 to $500. Was that because it is more expensive for them to process the loan? NO it was because there are less borrowers so they have to recoup their money from somewhere. For this bank the "cost" of processing personal loans (as with the others) has actually decreased over the years.
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