Reserve Bank Governor Don Brash left the official cash rate (OCR) unchanged at 5.75% this morning as most economists had expected.
The world economy is weak. ``The short-term outlook for most of our trading partners is deteriorating, although there are better signs in Australia," he says.
"Investment in New Zealand has been relatively weak, but consumer spending has remained relatively robust," he says.
"Many inflation measures are still higher than is consistent with our target, but most of the recent signs suggest inflation will fall back into the target range over the next year or so," Brash says.
Brash says growth in the previous quarters was revised upwards, reducing the impact of the March quarter figure. The annual rate of 2.5% was actually slightly higher than the average market expectation and exactly in line with the central bank’s expectations.
Financial markets were little changed after the statement, 90-day bank bills unchanged at 5.8% and the September bank bill futures were also unchanged, implying an expected physical rate of 5.75%.
