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Reserve Bank Governor Alan Bollard - Source: ONE News -
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Thursday's cut to the OCR should give borrowers
confidence.
The Reserve Bank has cut the official cash rate by 50 basis
points, or 0.5%, to 2.5%.
Reserve Bank governor Alan Bollard has been very bold and decisive and has showed that he's determined to keep interest rates low and ensure that the New Zealand economy can recover.
He was clearly unhappy with interest rates after his March policy statement , saying the rise was "unwarranted".
What he's done today now gives borrowers confidence that they can stay on floating rates for a much longer period without needing to fix.
It also gives banks confidence to potentially bring fixed term rates down because they too know that rates will be low for the next 18 months.
The cuts had an immediate impact on the currency, with the Kiwi falling 1 cent against the US dollar on the announcement.
Wholesale interest rates also fell. Westpac was the first out of the blocks cutting its six-month lending rate from 5.79% to 5.39%.
It's clear that the government doesn't have any stimulus to inject into the economy in its upcoming Budget (May 28). Recently the OECD and the IMF said it would be up to Bollard to provide this, and today he has.
The cut will give significant benefit to those who are coming
off fixed interest rates over the coming months which should help
the economy as it struggles to recover.
Compare mortgage rates from the major banks
Add a Comment:
Post new commentAlmer said on 2011-08-06 @ 10:42 NZDT: Report abusive post
Not Helen Clarks anti-smacking bill. Try Sue Bradford
getsmart 99 said on 2011-04-02 @ 18:01 NZDT: Report abusive post
Hello , All this talk about cutting the budget . The National Government has sadi they will not touch Super but I wonder if they might means test it . Some people really depend on this when they get older . Continueing to work passed 65 is fine for those able . Maybe their earning could be taxed at a higher rate , while they collect their Super. Just a thought . I wonder if this might be something Bill has up his sleave > There are many way s to skin a cat.
hayleywhitz said on 2011-04-01 @ 19:12 NZDT: Report abusive post
This government is just so short sighted. They are only looking at quick fixes. They have no big picture thinking at all. It does not take a rocket scientist to figure out that investing in high quality early childhood education is an investment in the future of Aotearoa New Zealand. It should be seen as exactly what it is, an investment, rather than a cost! It is clear that this government is focused on helping the rich get richer and bugger collaboration and collective responsibility.
exporter said on 2011-04-01 @ 17:30 NZDT: Report abusive post
What's this doing in the business section? More lightweight coverage of business matters like the rest of New Zealand's media we really don't need. When are your reports going to address the issues facing the New Zealand economy?
nztifosi said on 2011-04-01 @ 16:37 NZDT: Report abusive post
As a teacher aide at a decile 3 school in Auckland, the future of New Zealand with another National Gov' budget is easy to imagine - more children coming to school with no shoes and no breakfast, while their teachers are told to get them up to the 'national standard' with no support. One idea though - perhaps the truancy officers can use the new BMW's to ferry children to school - great use of resources on the 'front line'!