Boosting Activity in the South

Reserve Bank Governor Alan Bollard says New Zealand’s reconstruction of the earthquake-devastated city of Christchurch will boost growth and inflation pressures and may mean an increase in interest rates. Bollard is among Asia-Pacific central bankers who have held or lowered borrowing costs this year to ride out renewed threats to the global economy from Europe’s sovereign-debt crisis. The rebuild is likely to cost about $20 billion, equivalent to 10 per cent of gross domestic product, Bollard said. The high concentration of work in one region “will boost medium-term activity and inflationary pressures for an extended period,” he said. “It would therefore be inappropriate, all else equal, for monetary policy to be stimulatory during the reconstruction period.”


Tags: Alan Bollard  Bloomberg  Christchurch  New Zealand Reserve Bank  

RBNZ Turning Heads Around the Globe

RBNZ Turning Heads Around the Globe

“New Zealand is tiny by economic standards, but it’s a giant in central banking circles,” Forbes senior contributor William Pesek writes. “While working in Washington in the mid-to-late 1990s, I was…