The Governor of the Reserve Bank (Graeme Wheeler) increased the OCR – the Official Cash Rate –by a quarter of a percent to 2.75%. This is the first increase since March 2011. In fact the OCR has been 2.50% since April 2009 except for a brief period of about 6 months in 2010 when it was 3.00%. So today’s announcement is the start of a change. Governor Graeme Wheeler said that there would probably be further increases in the near future.
Home owners who have a floating mortgage will probably find their mortgage rate will increase. People who have money in the bank will get a higher interest rate and this may encourage borrowers from other countries to invest more money in New Zealand. This could increase the Kiwi dollar and make it harder for exporters to sell their products.
High prices for dairy products and the construction industry in Christchurch have helped the economy. In addition increased immigration has pushed up demand for housing. However, Mr Wheeler believes that the New Zealand economy is growing too fast and inflation could get out of control. It is his job to keep inflation low – between 1 to 3%.
To find out more about the Official Cash Rate, type ‘OCR’ in the search box.
Vocabulary
- The Reserve Bank – lends money to banks overnight so banks have to increase their rates
- floating mortgage – the bank can change the interest rate; opposite is a fixed mortgage
Grammar
Note present perfect with “since” – “has been 2.50% since April 2009 …”