Last week the Reserve Bank increased the OCR for a thirdconsecutive time to 3.25%, and delivered much the sameguidance on future interest rates as it did in its MarchMonetary Policy Statement (MPS). Despite some prominentnegative factors in the last few months – in particularthe ongoing drop in world dairy prices – we had warnedbeforehand that the balance of risks hadn’t shifted as muchas markets seemed to think. Sure enough, there was a strongmarket reaction to the RBNZ statement, with wholesaleinterest rates and the New Zealand dollar jumping higher.
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