Bloomberg News

N.Z. Shadow Board Says Central Bank Should Hold Interest Rate

July 23, 2012

New Zealand’s central bank should hold the official cash rate at a record-low 2.5 percent at the July 26 review, according to the majority of a nine-member panel of economists, academics and company executives.

Seven of the shadow board set up by the New Zealand Institute of Economic Research Inc. said Governor Alan Bollard should leave the rate unchanged, the Wellington-based institute said in an e-mailed statement. Two members prefer a rate cut.

All 16 economists surveyed by Bloomberg News expect no change in borrowing costs until next year. A government report last week showed annual inflation was the weakest in more than 12 years, while an institute survey July 7 showed business confidence fell in the second quarter.

The shadow board members indicate where they think interest rates should be, not what they expect will happen, the institute said. Across the panel, there is slightly less appetite for lower rates than in the June 12 outlook, with the weighted average preference for a cut falling to 31 percent from 34 percent.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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