11 Aug 2011

More economists pick NZ rates to stay on hold

3:16 pm on 11 August 2011

A growing number of economists believe the Reserve Bank will keep official interest rates steady in September.

Of 12 economists polled by the Reuters news agency, seven think there will be a rise in the Official Cash Rate from its low of 2.5% and five think there won't be.

A month ago, only one believed the rate would be held.

The Reserve Bank itself has hinted at a September rise, but that was before the latest global financial turmoil.

The central bank held its cash rate at 2.5% last month, but said there was little need for the rate to stay at this level if the global financial risks recede and the economy continues to recover.

The US Federal Reserve has pledged to keep American base interest rates near zero for two years to try to revive a sickly American economy.

Deutsche Bank chief economist Darren Gibbs says the Reserve Bank will take into account, when setting monetary policy, the statements on the US economy by the world's most important bank.

Of the seven economists who expect a rise in rates, four say it will be 25 basis points while three believe it will be a 50 basis point increase.

The Reserve Bank next reviews the official cash rate on 15 September.