N.Z. Expects to Cut Key Rate From 8.25% This Year (Update1)
June 5 (Bloomberg) -- New Zealand's central bank expects to cut the benchmark
interest rate from a record 8.25 percent this year, saying a slump in spending
and employment will reduce pressure on inflation. The nation's currency fell.
``We are now likely to be in a position to lower the official cash rate later
this year,'' Reserve Bank Governor Alan Bollard said in a statement released in
Wellington today after he kept the rate unchanged. ``We expect inflation to
return comfortably inside the target band over the medium term.''
Bollard, who has kept borrowing costs unchanged since July, stalling domestic
demand, says the economy contracted in the firth three months of this year.
Retail sales and employment fell in the first quarter and house sales slumped
in April to a 16-year low, adding to signs spending and inflation will slow.
Kiwi slides on this dovish comment. now 0.7690 from 0.7802 before news
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