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

New Zealand’s central bank should hold the official cash rate at a record-low 2.5 percent at the Sept. 13 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 Alan Bollard should leave the rate unchanged, the Wellington-based institute said in an e-mailed statement. Two members preferred a rate cut.

All 16 economists surveyed by Bloomberg News predicted no change in borrowing costs until next year, with a majority seeing the first rate increase in the second quarter. There is a 46 percent chance of a rate cut this year, according to interest-rate swaps data compiled by Bloomberg.

“The board is highly supportive of leaving interest rates at 2.5 percent but if there was to be a move, a cut would be more appropriate than a hike,” 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 twithers@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net