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The Reserve Bank of New Zealand Governor, Alan Bollard, said yesterday that he won’t be reducing the country’s key interest rate from its record high value in 2008, because the national inflation still remains the major concern.

In the fourth quarter of 2007 New Zealand CPI increased 3.2% — above the central bank’s target of 3.0%. In the same time economy grew 3.7% — its best expansion since 2004 and above the median forecast by the market analysts.

As Bollar said, the current 8.25% key interest rate is an appropriate level that is able to hold down the inflation and is still low enough to allow the country’s economy to go up at a desired pace. Nevertheless, he expects the growth to moderate slightly this year as the drought may weaken farming sector, the lack of liquidity can hurt the real estate sector and the overvalued currency diminishes the exporters’ revenues.

NZD/USD rose from 0.7903 to 0.7972 this week, gaining almost 0.9% but it has been moving generally sideways on Forex during last 30 days.

The majority of Forex traders expected that the Reserve Bank of India will lower the main interest rates today to pare with recent emergency cut by the Fed and the anticipated additional interest cut at tomorrow Fed’s meeting. But Yaga Venugopal Reddy, Governor of the Reserve Bank of India, decided to leave the key interest rates at the same level.

The main repurchase rate was kept at 7.75% — one of the highest rate level in near six years; two other key interest rates were also left unchanged.

Previous expectations of the rates cut led to the growth of the Indian stock market, which was almost eliminated after the rates decision has been announced.

It seems now that the central bank is more worried with the rising inflation that is growing on oil and food prices, than the possibility of the economy recession. And that can be justified especially if the economy is currently feeling quite well despite the global instability.