Reserve Bank hikes rates

The Reserve Bank has increased the Official Cash Rate from 6%t to 6.25%. The Bank has also stated that further tightening of monetary policy is likely to be required.

Speaking at the release of the Reserve Bank's September 2004 Monetary Policy Statement, Reserve Bank Governor Alan Bollard said "The New Zealand economy is performing very strongly. On balance, the recent economic data has delivered positive surprises. Economic growth is near its peak, but resources will remain stretched for some time, and inflation pressures remain strong.

"In terms of the economic outlook, there are risks to consider. The consensus view in our projections is that global economic activity is expanding at a reasonable pace. However, high world oil prices and softer growth in the US could slow global economic growth. Further, if the TWI continues to rise, or if commodity prices fall sharply, our growth prospects would be weaker.

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