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Thursday 24 April 2014  Add your comment
Yep, OCR up

The Reserve Bank has increased the official cash rate 25 points as expected. Expect floating rates to start rising today. To see what the RBNZ gover said Read On

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Economists differ on which way the OCR will go

Wednesday, October 3rd 2001, 10:16AM

by Jenny Ruth

After its uncharacteristically bold move in cutting rates two weeks ago, the Reserve Bank returned to its cautious approach and left interest rates unchanged today.

As expected, Reserve Bank governor Don Brash cites the "highly uncertain" outlook for the world economy and its unknown impact on New Zealand’s economy and inflation.

The official cash rate (OCR) was left unchanged at 5.25%.

"It is clear that the global economic outlook has deteriorated since the awful events of 11 September. We will inevitably feel some backwash from that, although our own economy appears to have been at least as robust before the attacks as we had previously expected," Brash says.

Figures last week showed the economy expanded 2% in the June quarter, way above economists' expectations of 1.4% growth.

"Our decision to cut the OCR by 50 basis points two weeks ago was a precautionary move that recognised the inevitable adverse effect and the likely impact on confidence. But how large those effects will be, and how long they will last, remains unclear,’’ Brash says.

Brash’s statement comes within hours of the US Federal Reserve cutting its benchmark interest rate by 50 basis points to 2.5%, its lowest level since the 1962 Cuban missile crisis. The Fed has cut the rate a full percentage point since September 11.

The Fed also talked about "significantly heightened uncertainty."

Brash’s statement today "reinforces that he saw the 50 basis points cut last month as an insurance premium and he doesn’t want to pay any more," says Peter Cavanaugh (pictured), associate director at Bancorp Treasury Services.

"New Zealand’s strong growth in the June quarter and the ongoing boost to the primary sector from the low currency will be enough for him to hesitate," Cavanaugh says.

New Zealand markets were unmoved after Brash’s statement, the 90-day bank bills unchanged from late yesterday at 5.27% and the December bank bill futures unchanged at 5.21%. That implies no further rate cuts this year, even though a number of economists are forecasting at least a further 25 basis point cut.

Bank of New Zealand bond dealer Baden Carter says the market interpreted the statement’s tone as being neutral to "at the margin, slightly on the hawkish side. There’s probably a slant towards the economy’s looking good scenario," he says.

Deutsche Bank economist Darren Gibbs, who notes that "we have a reputation of being reasonably hawkish," is still calling for a 25 basis point cut in November and interprets today’s statement as leaving the door open for that.

"The global outlook has deteriorated so markedly,’’ he says. When the Reserve Bank prepares its more considered view of the economy for the next monetary policy statement "it will come up with an economic outlook that’s quite a bit weaker than was previously the case."

The US market is already pricing in a further 25 basis point cut and Deutsche Bank is forecasting a further 50 points.

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Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AMP Home Loans 6.49 5.69 6.29 6.40
AMP Home Loans $200k+ 6.39 5.59 5.99 6.30
AMP Home Loans LVR <80% - - 5.99 -
ANZ 5.99 5.85 6.49 6.85
ANZ LVR > 80 5.99 6.35 6.99 7.35
ANZ Special - - 5.95 -
ASB Bank 6.00 5.85 6.49 6.85
ASB Bank Special - - - -
BankDirect 6.00 5.85 6.49 6.85
BankDirect Special - - - -
BNZ - Classic - - 5.95 -
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.19 5.85 6.29 6.29
BNZ - Mortgage One 6.60 - - -
BNZ - Rapid Repay 6.19 - - -
BNZ - Std, FlyBuys 6.19 5.85 6.29 6.29
BNZ - TotalMoney 5.99 - - -
Credit Union Auckland 6.20 - - -
Credit Union Baywide 5.85 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Fidelity Life 5.70 5.40 6.00 -
Lender Flt 1yr 2yr 3yr
Finance Direct 6.10 6.45 6.69 7.10
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 5.90 5.60 5.99 6.35
HBS LVR > 80% - - - -
Heartland 5.95 6.25 6.50 7.10
Heretaunga Building Society 5.75 5.50 6.30 -
Housing NZ Corp 5.75 5.50 6.30 6.40
HSBC Premier 6.24 5.59 6.29 6.55
HSBC Premier LVR > 80% - - - -
HSBC Special - - 5.79 -
Lender Flt 1yr 2yr 3yr
Kiwibank 5.90 ▲5.85 ▲6.19 ▲6.60
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 5.60 - - -
Kiwibank LVR > 80% - - 6.29 6.40
Liberty 5.64 - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.45 5.95 6.60 -
NZ Home Loans 6.10 5.69 6.29 6.60
Perpetual Trust 7.70 - - -
RESIMAC - lo doc 7.34 7.14 7.49 8.05
RESIMAC LVR < 80% 5.84 5.64 5.99 6.55
Lender Flt 1yr 2yr 3yr
RESIMAC LVR < 85% 6.84 6.64 6.99 7.55
RESIMAC LVR < 90% 7.84 7.64 7.99 8.55
SBS Bank 5.90 5.60 5.99 6.35
SBS LVR < 80% - - - -
Silver Fern 5.95 6.10 6.55 7.05
Southern Cross 5.95 6.25 6.50 7.10
Sovereign 6.10 5.85 6.49 6.85
Sovereign Special - - - -
The Co-operative Bank 5.95 5.65 5.99 6.35
TSB Bank 6.04 5.40 5.99 6.40
Wairarapa Building Society 6.20 5.75 5.95 -
Lender Flt 1yr 2yr 3yr
Westpac 5.74 5.85 5.95 6.85
Westpac - Capped rates - 6.19 6.69 -
Westpac - Offset 5.74 - - -
Median 6.00 5.85 6.29 6.85

Last updated: 22 April 2014 9:04am

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