Inflation focused upon by N.Z. Reserve Bank Plans

Inflation focused upon by N.Z. Reserve Bank Plans

According to a recent statement by New Zealand's central bank, it would concentrate on inflation risks over the next year, whilst the global economy recovers from recession.

In its annual "statement of intent" released in Wellington today, the bank said a prominent challenge appears in inflationary risks once confidence returns to normal in global markets; particularly when there is so much liquidity around. It added: "We will be focused on these risks as we consider the likely nature of a recovery."

The benchmark interest has been cut by Governor Alan Bollard to a record low, in an attempt to restart an economy hit by the worst recession in more than three decades.

On 11th June, Bollard specified that inflation might ease significantly this year. He said that this would provide him the requisite scope for keeping the borrowing costs low until late 2010. He added that inflation needs to be kept between 1 percent and 3 percent.

It is being predicted by the central bank that consumer price will rise just 1.2 percent in the year ending March 31, 2010, and 2.3 percent in the following year.