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Weak business confidence will lead to OCR cut

Weak business confidence numbers will increase the chances of another Official Cash Rate cut next month, say Westpac economists.

Thursday, October 10th 2019, 10:28AM

NZIER data at the end of September revealed business confidence was at its lowest level since 2009, with increased pessimism around the trading and investment outlook.

Westpac economists, including Dominick Stephens, say the weak confidence "adds to the likelihood of another OCR cut at the November Monetary Policy Statement, despite the RBNZ’s seemingly noncommittal comments at its September review".

They added: "We have maintained that weaker data between the two review dates would prompt the RBNZ into action; the business confidence survey certainly fits that bill."

The Westpac team say interest rate swap markets are pricing in "some chance" there will be a 50 basis point cut in November, "no doubt with an eye to the precedent set in August". 

Westpac economists said they had not seen "a build up in inflation pressures" and suspect the next available set of data around inflation will "remain subdued", adding further weight to to another OCR cut. 

The economists said the case for a cut after November was "not so clear cut", but the economy was not living up to the RBNZ's forecasts of a gradual pick up in the second half of this year.

Since the 50 basis point rate cut in August, banks have shifted to more aggressive predictions for the OCR. Kiwibank and ASB believe the OCR will drop to just 0.5%. 

Tags: NZIER OCR OCR forecasts RBNZ Westpac

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  • a2: could the milk be starting to turn?
    “Great Fundemental look.I guess in the ASX50 . as long as Aussies still love buying the Dip..its no worries Graeme Adams...”
    24 hours ago by Graeme33
  • It starts with governance
    “Hi David and thanks for your words also. I did read the FMA stuff before the post and also in my first response mention...”
    1 day ago by gavin austin adviser business compliance
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    “Sadly, AMP is becoming less and less relevant. Apart from this tiny blip of positive cash inflow, they've been bleeding clients...”
    1 day ago by Contrarian
  • It starts with governance
    “Good words Gavin - might also mention the FMA publication - https://www.fma.govt.nz/compliance/guidance-library/corporate-governance-in-new-zealand-principles-and-guidelines/...”
    1 day ago by dcwhyte
  • It starts with governance
    “adviser1 - go talk to Partners Life. they have a great tool to help with this sort of stuff. ...”
    1 day ago by Tash
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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 5.50 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 3.85 3.95 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.55 2.65 2.79
Kainga Ora 4.43 ▼2.93 ▼3.07 ▼3.24
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 ▼3.35 2.99 3.35
SBS Bank 4.54 3.05 3.19 3.25
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 2.55 2.69 2.75
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.35 3.49 3.79
TSB Special 4.54 2.55 2.69 2.99
Wairarapa Building Society 4.99 ▼3.55 ▼3.49 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.55 2.69 2.79
Median 4.55 3.05 3.13 3.12

Last updated: 14 August 2020 1:06pm

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