Hence, the overnight cash rate (OCR) was lifted from 5.00% to 6.5% over the course of last year, in order to slow the pace of growth.
Our forecast is for economic activity to move closer to its potential level over the next year, reflecting not only the effects of higher interest rates on private consumption and residential investment but also an easing in commodity prices. Determining the current level of potential output is a key issue for monetary policy.