Stronger terms of trade could drive interest rates up further, RBNZ says

Wed, 11 Dec 2013

Dec. 12 (BusinessDesk) - Strong commodity prices, particularly for dairy products, could drive up interest rates more than currently expected if they continue to keep the terms of trade at elevated levels, the Reserve Bank says. In an alternative scenario in today’s monetary policy statement, the bank projected a more aggressive tightening cycle if global demand for New Zealand exports keeps commodity prices high and maintains an elevated terms of trade. The terms of trade were at a 40-year high in the September quarter as surging dairy pric...

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