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N.Z. Shadow Board Says Central Bank Should Extend Rate Pause

Dec. 4 (Bloomberg) -- New Zealand’s central bank should hold the official cash rate at a record-low 2.5 percent at its Dec. 6 meeting, according to the majority of a nine-member panel of economists, academics and company executives.

Seven of the so-called shadow board set up by the New Zealand Institute of Economic Research Inc. said Governor Graeme Wheeler should leave the rate unchanged this week, the Wellington-based institute said in an e-mailed statement. Two members preferred a rate cut.

All 16 economists surveyed by Bloomberg News predict no change in rates this week and that Wheeler’s next move will be to raise borrowing costs, probably in the second half of 2013. Traders are pricing in a 15 percent chance of a rate cut this week, according to interest-rate swaps data compiled by Bloomberg.

“If the Reserve Bank was to move rates, the Shadow Board is strongly in favor of a cut rather than an increase,” Kirdan Lees, an economist at the institute, said in the statement.

The shadow board members indicate where they think interest rates should be, not what they expect will happen, the institute said. New Zealand’s official cash rate hasn’t been changed since March 2011.

To contact the reporter on this story: Tracy Withers in Wellington at

To contact the editor responsible for this story: Stephanie Phang at

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