The visible hand in economics

OCR review October 2007

Posted on: October 25, 2007

The OCR was left unchanged at 8.25%.

It seems that the RBNZ took a relatively neutral tone, stating that it was happy that without any external shocks the current rate should be sufficient to keep inflation in the target band of 1-3%.

However, looking at the set of external shocks the Bank provided seems to indicate that there is still some prospect of rate increases in the near future.  Specifically, the Bank indicated that any increase in government spending would be taken as an upward shock.  As we are entering an election year where the parties will base policy on the fundamentals of lollynomics rather than fiscal restraint, the balance of probabilities seems to suggest further hikes may be on there way.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Add to Google
%d bloggers like this: