By Tony Field
The Reserve Bank has kept the Official Cash Rate the same because of worries about the fragile global economy.
The OCR remains at a record low of 2.5 percent, with Reserve Bank governor Allan Bollard hinting he may keep rates on hold into 2012.
Riot police and protestors clashed on the streets of Rome, as the Italian Government approved plans for major spending cuts.
Those cuts are the price Italy must pay to receive more financial aid from the European Union.
The turmoil in Europe is the reason the Reserve Bank is keeping the Official Cash Rate on hold.
“There is a real risk that global economic activity could be slowing sharply,” he says.
The announcement saw the Kiwi dollar slip about half a cent against the US, but it's still well over 81 cents, a sign our economy is considered to be in pretty good shape compared to places like Europe.
Even without a lift in the OCR, interest rates on mortgages and term deposits might go up to reflect the rising cost of money offshore.
The Finance Minister says he's concerned by what's happening in Europe but optimistic it won't derail our economy.
“Even if things get reasonably serious in Europe, the UK, US and Europe slow down,
we can still expect pretty reasonable growth in New Zealand,” says Bill English.
Global sharemarkets got a lift today after the leaders of Greece, Germany and France reaffirmed their commitment to preventing a Greek default, but the markets are volatile and that is why Bollard's coy about when rates could go up.
Economists tipping a rates rise might not happen until next March.
3 News