Recent releases Drought takes the edge off growth Economic activity expanded 0.3% in the March quarter (seasonally adjusted). As expected, the boost to economic activity from rising rebuilding work was muted by drought conditions across the North Island. We expect the drought to hold down activity through the middle of this year, but with consumer and business demand rising, a recession will be avoided. Read more Residential building surges Early estimates from What’s On suggest that there were 1,796 non-apartment consents in May. Adjusting for seasonal factors, this was the strongest result since April 2008. The recent rebound in consent numbers is stronger than we had allowed for in our March forecasts. Read more View all recent releases in Analysis and forecasting Commentary OCR’s holding pattern remains The Reserve Bank kept the official cash rate on hold at 2.5% this week. With inflationary pressures contained, the Bank is in no rush to begin lifting the OCR yet. However, once capacity pressures from the Canterbury rebuild begin to spill into the broader economy and economic growth accelerates, the Reserve Bank will look to tighten monetary policy. At this stage, we expect the Bank to begin hiking the OCR from March 2014. The Reserve Bank placed a significant emphasis in its June Monetary Policy Statement on discussing risks posed to policy settings by the rebuild and the elevated New Zealand dollar. If the dollar returns to its recent highs, there is a chance the Bank would cut the OCR. On the other hand, if capacity pressures from the rebuild mount quickly, then the Bank would look at raising the OCR early. Financial weekly: PDF Commentary FinancialMarkets Market Graphs Calendar Factoring in factor taxes As was pointed out in a previous article on tax, as a society we care about more than just strict efficiency when we set up the tax system. We also want to ensure that those with the ability to pay more do indeed pay more. Since we cannot observe an individual's ability, in an "efficient" system we may struggle to redistribute to the worst off in society. This is where the trade-offs from taxing factors of production come in. Read more. Getting past John Key’s ego and changing the superannuation age I remember during my first year of university study beingintroduced by lecturer John Henderson to Dr James Barber’s typology of Americanpresidents according to their character and worldview. Dr Barber’s workassessed presidents on two baselines. Read more. View more Commentary in Analysis and forecasting Latest Forecasts What’s new, pussycat? Economic forecasts Building forecasts Transport forecasts For almost five years, our small flightless native economy has lived in fear of the threat posed by overseas invaders. The Global Financial Crisis turned fluffy financial markets into a hissing menace, and since mid-2010, the colony of feral European economies has constantly threatened to go out on a wholesale slaughter.