Official Cash Rate Increased To 5.25 Per Cent

The Reserve Bank today raised the Official Cash Rate from 5.0 per cent to 5.25 per cent.

The Bank's Governor, Don Brash, commented that "Since the Bank's latest comprehensive review of the outlook for inflation last month, things have on balance evolved very much as expected at that time.

"It is clear from December quarter GDP data that domestic demand has been growing strongly, and most information for the March quarter points in the same direction. Retail spending has been very strong, and house sales suggest a buoyant residential property market. Both business and consumer confidence continue to be high.

"The world economy too, though not nearly as buoyant on average as the New Zealand economy, appears to be continuing a gradual recovery.

"All in all, and given the outlook for inflation, a further moderate adjustment in the Official Cash Rate seems appropriate," Dr Brash concluded.

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