New Zealand Keeps Rates Unchanged - 26.7.2012

The central bank of New Zealand decided to keep the nation’s benchmark interest rate unchanged at 2.5%. The rate was lowered to the current level in March 2011 and remains at its record low amid growing fiscal risks from Europe and falling inflationary pressure in New Zealand. Nevertheless according to the central bank’s expectations, the national economy will grow modestly in the coming years and inflation will stabilize in the middle of the bank’s target range of 1%-3%. The New Zealand dollar strengthened yesterday against the US counterpart from 0.7806, a six-week low, and extended gains in Asian trading today touching 0.7930. The gains however can be partly explained by an external factor, like arguments in favor of granting a banking license to the European Stability Mechanism so that it could receive financing from the ECB.