Official Cash Rate Unchanged

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

Reserve Bank Governor Alan Bollard said: “Provided current global financial risks recede and the economy continues to recover, the Bank sees little need for the March 2011 ‘insurance’ cut to remain in place much longer. The current very high value of the New Zealand dollar is acting as a drag on the New Zealand economy. If this persists, it is likely to reduce the need for further OCR increases in the short term.”

90 day bank bills have crept up to 2.82% today from 2.76% yesterday and up from the low 2.60’s a couple of weeks ago.  What this tells you is that the interest rate market is pricing in a raise in the OCR in the near future. Your home loan floating interest rate is therefore likely to go up.

By how much, and how frequently thereafter that first raise, well; given the current global financial trevails we shall leave that prediction to those capable of operating crystal balls.

At auction yesterday this commercial building on Mt Eden Road sold for $2,100,000 at an approximate yield of 7.36%.