Monetary policy is the name given to the management of the supply of money in an economy. The Reserve Bank does this for New Zealand by setting the Official Cash Rate (OCR) to keep prices stable and keep our cost of living from fluctuating too much.
The OCR is an interest rate (cost of borrowing money) that influences all other interest rates (such as the interest you pay on your mortgage or receive on your savings). How high interest rates are affects how much businesses and individuals spend or save – which impacts how much prices can go up (inflation) or down (deflation). Keeping prices and the flow of money around our economy stable, means our economy can grow in a healthy and sustainable way... (Full Story)
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