No Change to OCR

Tuesday marked the first day of Spring, but otherwise no change for borrowers, when the Reserve Bank decided to leave the official cash rate unchanged at 3 per cent for the fifth month in a row.

In a statement announcing the decision, Reserve Bank Governor Glenn Stevens said that with higher dwelling activity and public demand, it now appears that investment may not be as weak over the year ahead as earlier expected.

"Housing credit has been solid and dwelling prices have risen over recent months", Governor Stevens said.
"Business borrowing, on the other hand, has been declining, as companies have sought to reduce leverage in an environment of tighter lending standards."

He noted that large firms have had good access to equity capital and access to debt markets appears to be improving, helped by the better-than-expected economic conditions and increased willingness on the part of investors to accept risk.

Economists, however, have read into the Board's statement that it will not be long before rates may rise again.
"Underlying inflation should continue to moderate in the near term, but the likelihood of inflation being persistently below the target now looks low", Governor Stevens said.

He concluded saying that the Board's judgement is that the current setting of monetary policy remains appropriate for the time being.