OCR remains unchanged at 2.5 percent

The Reserve Bank today left the Official Cash Rate (OCR) unchanged at 2.5 percent.

Reserve Bank Governor Graeme Wheeler said: β€œReflecting the balance of several forces, we expect annual GDP growth to accelerate to about 3.5 percent by the second half of 2014, and inflation to rise towards the midpoint of the 1 to 3 percent target band. Given this outlook, we expect to keep the OCR unchanged through the end of the year.”

The Auckland property market got a repeated warning in the form of β€œIn the meantime rapid house price inflation persists in Auckland and Canterbury. As previously noted, the Reserve Bank does not want to see financial or price stability compromised by housing demand getting too far ahead of the supply response.”

I’m keeping an eye on rising bond yields in the United States as a result of “tapering” concerns.