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Economists unanimous on rate cut

Economists unanimously agree that the Reserve Bank will cut the Official Cash Rate to 1.25% next week, according to TMM's OCR Preview Survey.

Friday, August 2nd 2019, 11:56AM

All of the economists surveyed by TMM Online gave a 60%-99% certainty that the central bank will slash rates to a new record low.

The strong view comes amid lacklustre growth, inflation and business confidence figures, and rate cuts taken by influential central banks including the US Federal Reserve and Reserve Bank of Australia. 

Economists believe the RBNZ will cut the OCR and leave the door open to further cuts this year, dependent on data over the next few months. 

"I expect the RBNZ to lower its forecast for the OCR to allow for another one or two OCR cuts within the year," said Peter Cavanaugh of Bancorp.

"Along with the OCR cut, we expect a lower OCR track, opening up the possibility of a further rate cut in the quarters ahead," ANZ's Michael Callaghan said.

All of the economists surveyed by TMM believe the OCR has not yet troughed in this cycle. 

Brad Olsen, of Infometrics, warned further rate cuts may be ineffective. 

"We expect that the Reserve Bank may well cut to 1% by the end of 2019, but strongly reiterate that if we were on the Monetary Policy Committee, we would vote not to cut. As we have repeatedly pointed out, further cuts to the OCR are having less effect," Olsen said.

Jarrod Kerr, chief economist at Kiwibank, said a cut next week was "a foregone conclusion".

"The question they’ll need to ask themselves is: how low are they prepared to go? And let’s face it, a cash rate below 1% is only a hiccup away. We’ve gone from worrying about the global economy and escalating trade tensions, to worrying a little more about our own economic activity," Kerr added.

 

 

 

 

Tags: ANZ Bancorp Treasury Services interest rates Kiwibank RBNZ

« Campbell leaves Astute FinancialOCR will fall to 0.75%: Kiwibank »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 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 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
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 3.54 3.54 3.69
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 ▼5.20 ▲4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▲3.45 3.55 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 - ▼3.39 3.45 3.89
Sovereign 5.30 ▼3.89 ▼4.05 ▼4.39
Sovereign Special - ▼3.39 ▼3.55 ▼3.89
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 - 3.39 3.45 3.99
Median 5.34 3.99 4.07 4.39

Last updated: 9 December 2019 9:02am

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