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Market pricing 50% chance of OCR cut: ANZ

The overnight interest rate swap market is pricing in a 50 percent chance of an OCR cut by mid next year, according to ANZ. 

Monday, September 3rd 2018, 11:37AM

The swap market priced a 20 percent chance of an OCR cut immediately after the central bank’s recent MPS announcement, but has moved following weak business confidence data.

In its latest weekly update to the market, ANZ said falling business confidence delivered a further blow after the central bank's dovish language last month.

ANZ’s recent Business Outlook Survey indicated falling confidence across the country, with 50% of businesses saying they expected a deterioration in business conditions. ANZ chief economist Sharon Zollner told TMM markets “have definitely moved in response to weak business data”.

ANZ recently indicated an OCR cut was more likely than a hike. The bank's economists reiterated they were “leaning” towards officially forecasting a cut. The economists said the Reserve Bank might be willing to “front foot” a response to slowing growth by cutting rates. They said the central bank would "need to be convinced that the slowdown is real and relatively broad-based, and that extra monetary policy support is therefore warranted”.

However, the bank believes businesses could have overstated their lack of confidence and believes there are still green shoots for the economy. “The primary sector is performing well, particularly agriculture," Zollner said. She added the regions were likely to be drivers of growth in Q2. The bank has upgraded its initial GDP growth forecast for the quarter to 0.8%. 

Tags: ANZ OCR OCR forecasts RBNZ

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Lender Flt 1yr 2yr 3yr
ANZ 5.79 4.55 4.79 4.99
ANZ Special - 4.05 4.29 4.49
ASB Bank 5.80 4.44 4.69 4.89
ASB Bank Special - 3.95 4.29 4.49
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.10 4.29 4.49
BNZ - Std, FlyBuys 5.90 4.69 4.79 4.99
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.20 5.25 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.70 4.85 -
Housing NZ Corp 5.80 4.69 4.79 4.79
HSBC Premier 5.89 3.99 4.19 4.69
HSBC Premier LVR > 80% - 3.79 - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.55 4.69 4.99
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.05 4.29 4.49
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special - - - -
SBS Bank 5.89 4.85 5.05 4.49
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.19 3.95 4.49
Sovereign 5.90 4.45 4.69 4.89
Sovereign Special - 3.95 4.29 4.49
The Co-operative Bank - Owner Occ 5.75 4.10 4.35 4.49
The Co-operative Bank - Standard 5.75 4.60 4.85 4.99
TSB Bank 5.80 4.45 4.69 4.99
TSB Special - 3.95 4.19 4.49
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.69 4.79 5.19
Westpac - Offset 5.95 - - -
Westpac Special - 4.15 4.29 4.59
Median 5.89 4.50 4.69 4.79

Last updated: 2 December 2018 8:39pm

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