19 May 1999

OCR unchanged

The Reserve Bank today left its Official Cash Rate (OCR) unchanged at 4.5 per cent.

This came with the release of the May 1999 Monetary Policy Statement.

Reserve Bank Governor Don Brash commented, "The economic data during the last quarter have been much as we projected back in the March Monetary Policy Statement, and a steady economic recovery is now well under way. Inflationary pressures still appear to be well in check.

"Compared to March, the international environment now seems less fragile. With this, confidence has lifted, and markets around the world appear to be anticipating a robust global recovery, and, in particular, a significant rebound in commodity prices. This appears to have driven the substantial appreciation in the New Zealand and Australian currencies in recent months.

"This rise in the exchange rate means monetary conditions have tightened more than we projected back in March. In the Reserve Bank's view, the global economic fundamentals are not as strong as this appreciation would suggest, and the rise in the exchange rate may prove to be temporary. For this reason no change in the OCR is currently warranted," Dr Brash concluded.

For further information contact
Paul Jackman
Corporate Affairs Manager
Phone 04 471 3671, home 04 938 8177, pager 026 105 085,
Email jackmanp@rbnz.govt.nz