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OCR Preview: Economists predict rates will hold

Economists say the Reserve Bank will keep the Official Cash Rate on hold next week, despite mounting global uncertainty and weak growth in New Zealand.

Friday, June 21st 2019, 7:22AM

A total of 85% of economists who responded to TMM's OCR Preview Survey say the central bank's Monetary Policy will opt to keep the OCR at its current record low. 

The group of economists believe there is an outside chance rates could be cut, but say Adrian Orr and fellow MPC members will keep their powder dry for now. 

All respondents to our survey believe the OCR will drop further, with cuts in August predicted. Two economists say a further cut in November will take the OCR to 1%.

Amid escalating trade tensions between the US and China, and falling GDP in major economies, leading economists say the bank could point to increased risks to the domestic economy.

Jeremy Couchman, senior economist at Kiwibank, said: "The Monetary Policy Committee may decide to shift the language in the statement to an explicit loosening bias."

Robin Clements, an economist at UBS, also predicted a shift to "language likely interpreted as an easing bias ahead of August MPS". 

Christina Leung of NZIER says the RBNZ "will continue to leave door open to further easing, highlight importance of upcoming data".

Of the economists surveyed, only Michael Reddell, an independent, believes the Reserve Bank will pull the trigger on a rate cut. 

Reddell believes the forthcoming update on the government's Kiwibuild reboot will influence the central bank's thinking.

"The Bank's forecasts include quite a boost to demand from Kiwibuild, so whatever decisions are announced shortly about the KiwiBuild reboot might matter," Reddell added.

Tags: BNZ Kiwibank

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
ASB Bank 5.20 4.05 3.95 4.39
ASB Bank Special - 3.55 3.45 3.89
BNZ - Classic - 3.55 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.35 3.35 3.35
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank 5.80 4.30 4.20 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.45 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.55 3.39 3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.55 3.45 3.99
Median 5.34 4.04 4.09 4.39

Last updated: 11 November 2019 4:01pm

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