The Official Cash Rate stays the same

The Governor of the Reserve Bank, Dr Bollard, kept the OCR at 2.5% today. Dr Bollard said he kept it at the same rate because of financial problems in Europe. Also the slowdown in the US is a concern. In addition, the US will need to borrow more money again very soon. At the moment, the New Zealand economy is not affected too much by what is happening overseas. Dr Bollard seemed surprised that the New Zealand economy is still doing OK. If China and other Asian countries are affected by Europe and the US, this could make it harder for New Zealand to borrow money overseas.

The Kiwi dollar dropped from US 82c yesterday to 81.28 this evening. Dr Bollard believes the Kiwi dollar is too high. The high Kiwi dollar makes it difficult for New Zealand exporters to sell their goods overseas.

The OCR influences the cost of borrowing money for New Zealanders. Mortgage rates go up when the OCR goes up. It is possible the Reserve Bank will increase the OCR at the end of October. If this happens, the Kiwi dollar could drop.

Listen to March 10th 2011 to hear more about the OCR.


“affect” means influence It is a verb; “effect” is usually a noun meaning result.


The high Kiwi dollar makes it difficult / harder (for X) to do something.
Think of some other sentences you could make using this structure: … makes it easy / easier / hard etc.

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