RBNZ's rates view unchanged

Reuters | Tuesday, 9 Feb 2010

Reserve Bank Governor Alan Bollard says the worse-than- expected unemployment data last week has not altered the bank's view on when it might start raising interest rates.

"We haven't changed our view from what we said last week which was we think we will watch the data carefully, maybe around the middle of the year, but that's a maybe," Bollard said on Sunday.

The Reserve Bank said on January 28 that it expected to begin removing policy stimulus around the middle of this year.

Data last week showed unemployment surging to a 10-year high of 7.3 per cent as more people sought work but in a shrinking job market. The central bank saw it peaking at 6.6 per cent by March this year.

Asked if unemployment in New Zealand had peaked, Bollard said: "Well, we hope so, we think so."

Bollard said the unemployment data was "not all bad news", which was boosted by the rise in the number of people wanting to return to the workforce while a small number of jobs were lost.

He described the domestic and global economies as going through a fragile period, but growth was expected to improve through the year. Financial markets have shifted their pricing for the first rate hike to June from April. Reuters