New Reserve Bank governor leaves interest rate unchanged

9.03am

The Reserve Bank today left the Official Cash Rate unchanged at 5.75 per cent.

Reserve Bank Governor Alan Bollard said the New Zealand economy has shown solid growth over the past year with both domestic and export activity proving robust. Growth over the June quarter of 2002 was a little stronger than we expected.

Growth among New Zealand's trading partners had continued to track at relatively modest levels, however.

Dr Bollard said this had been anticipated to some extent in the Bank's August Monetary Policy Statement, but recent developments in financial markets suggested that any sustained recovery offshore could take longer to occur than previously thought. The soft international backdrop was expected to dampen New Zealand's growth outlook over the coming year.

"Reflecting the balance of these factors, the overall outlook has evolved broadly in line with expectations," said Dr Bollard.

"Inflation still appears likely to edge downwards over the next year or so. The focus of monetary policy is now on keeping inflation securely within the range mandated in the Policy Targets Agreement on average over the medium term.

"Given this, the Bank sees no urgency to adjust interest rates at this time. This should assist in ensuring that we also avoid unnecessary instability in output, interest rates and the exchange rate and that economic growth prospects are maximised, given our current outlook."

The next OCR announcement comes with the release of the Monetary Policy Statement on November 20.