The Reserve Bank sees "more positive signs ahead” despite uncertainty in the Canterbury rebuild, a slow United States recovery and the simmering eurozone debt crisis, governor Alan Bollard says.
On the eve of his departure after a decade leading the Reserve Bank, Bollard said he had had a “turbulent but hugely rewarding” decade as governor and chief executive.
Graeme Wheeler will take over tomorrow.
In the Reserve Bank's annual report issued yesterday, Bollard said the recovery in New Zealand had been “slower than we would have liked”, with trading partners affected by Europe's debt crisis and bank funding enduring “fragile periods”.
A slow recovery in the United States and the eurozone crisis had cast a shadow over world growth following the global financial crisis.
The Bank had held the official cash rate unchanged at 2.5 per cent for a record 12 reviews, the governor said in the annual report.
The Canterbury recovery would eventually provide a “significant boost to nationwide activity for an extended period”.
Bollard said there were “more positive signs ahead”.
Commodity prices had softened but remained reasonably strong, and important markets in Asia were “reasonably robust”.
“We have just ended an excellent farm season,” he said.
Banks had enough capital, funding and a willingness to finance more activity with interest rates at historic lows.
However, Bollard said it was important New Zealand was able to withstand shocks.