There were no surprises yesterday when Alan Bollard left the OCR unchanged at 3%. Although the statement from Bollard stated that the projection for the NZ economy was consistent with the December statement, there was mention of the following which indicate an increase the OCR sooner than later:
* housing market activity has stabilised
* export prices of commodities have increased
* business confidence has improved
* imports of capital equipment have risen
“While interest rates are likely to increase modestly over the next two years, for now it seems prudent to keep the OCR low until the recovery becomes more robust and underlying inflationary pressures show more obvious signs of increasing.” Alan Bollard
Also global conditions will play an important role in any decsision by the RBNZ. According to the BNZ, if conditions do remain firm we could see an increase in the OCR in June with a 4.25% target for end-year and a 5.00% peak by mid 2012.