WELLINGTON, Oct 25 (AFP): New Zealand's central bank left interest rates on hold today but warned the government that increased spending or tax cuts would up the risk of further rises.
Reserve Bank of New Zealand Governor Alan Bollard left the official cash rate (OCR) at 8.25 per cent, one of the highest official rates in the developed world.
The tone of his announcement was broadly neutral but Bollard said much depended on the government.
"Despite ongoing surpluses in the government's operating balance, fiscal policy is contributing to inflationary pressure," Bollard said in a statement.
"Any further easing in fiscal policy beyond that already announced will add further upside risks to medium-term inflation."
The government announced a cut in the business tax rate to 30 per cent from 33 per cent in this year's budget and has hinted at personal tax cuts in the budget in 2008 -- an election year.
Bollard added a proposed greenhouse gases emissions trading scheme and rising world food prices could also add to inflation.
New Zealand central bank leaves rates on hold
FE Team | Published: October 26, 2007 00:00:00 | Updated: February 01, 2018 00:00:00
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