Reserve Bank of New Zealand certainly moves quickly
One thing we can say about the Reserve Bank of New Zealand is they certainly move quickly when they think it is appropriate to do so.
For example, in the nine-month period between July 2008 and April 2009, the New Zealand official cash rate (OCR) was cut on seven occasions, from 8.25 per cent to 2.5 per cent.
Now the opposite is occurring and in the past four months the OCR has been increased on four occasions – each by 0.25 per cent – from 2.5 per cent to 3.5 per cent. The New Zealand economy is expected to grow by 3.7 per cent in 2014, with the recovery in construction and net migration adding to housing and household demand.
The graph below compares the New Zealand 90-day bank bill rate with the New Zealand official cash rate, which commenced life in March 1999 at 4.5 per cent.